DETROIT, May 24 — General Motors said on Thursday that it expected to take a $1 billion charge in the second quarter and pay a total of $7 billion to cover retirement costs for workers at the Delphi Corporation, its former parts division.þþThe company also said that it had received a new request for accounting documents from the Securities and Exchange Commission, which has been investigating G.M.’s accounting practices for nearly two years.þþBoth announcements, along with the news that G.M. might sell a transmission business to raise cash, were made in a regulatory filing to the S.E.C.þþShares of G.M. declined 96 cents, to $30.47.þþThe overall amount for Delphi is near the high end of the $6 billion to $7.5 billion range that G.M. had previously set for its exposure. Negotiations among the automaker, Delphi — which is reorganizing under bankruptcy protection — and the United Automobile Workers union to determine wages, benefits and liabilities have dragged on for months, with the U.A.W. recently making a new offer that the companies are evaluating.þþ“We’ve already booked $6 billion,” a G.M. spokeswoman, Renee Rashid-Merem, said. “Now we’re estimating, based on the status of discussions, $7 billion. It’s primarily noncash.”þþIn the filing, G.M. said that the S.E.C. has asked for documents relating to the company’s accounting of derivatives trading in its 2006 annual report. Ms. Rashid-Merem said that G.M. would comply with the request, which is voluntary.þþLast year, G.M. restated its earnings results since 2000 and it has made several personnel and organizational changes in an effort to clean up its accounting practices.þþThe company said that it might need to restate some earnings after the agency concludes a review of accounting at its finance arm, the General Motors Acceptance Corporation. In the fall, G.M. sold 51 percent of G.M.A.C. to a private equity firm, Cerberus Capital Management of New York.þþCerberus, which last week agreed to buy G.M.’s crosstown rival, the Chrysler Group, recently said that it would pull out of a deal to bring Delphi out of bankruptcy. G.M. said that it did not expect the withdrawal by Cerberus to materially change its responsibility to Delphi, although some aspects of the reorganization plan would be modified. þþThe plan calls for G.M. to reimburse Delphi for about $500 million in labor expenses upon leaving bankruptcy protection. G.M. would also cover $300 million to $400 million in annual labor-related expenses and annual transitional payments of about $100 million.þþG.M. said in Thursday’s filing that those expenses “will be more than offset in the long term by its savings from reductions to the $2 billion price penalty it now pays Delphi annually for systems, components and parts.”þþDelphi filed for bankruptcy protection in October 2005. Since then, it has closed plants, slashed the size of its work force and sought to significantly reduce the wages and benefits paid to remaining employees.þþThe U.A.W. has fought the changes, threatening at various times to strike the supplier, which in turn could cripple G.M.’s operations. G.M., which has lost $12.4 billion in the last two years and is in the process of an overhaul, spun off Delphi in 1999.þþTalks are scheduled to begin soon on a four-year labor agreement at all three Detroit automakers to replace the contract that expires in September.þþThose discussions also are expected to be contentious, and one analyst, Brian Johnson of Lehman Brothers, wrote in a note to clients that G.M. could use $5.2 billion that it plans to raise by selling convertible bonds and opening a new line of credit to weather any union disruptions that might occur this summer. G.M. announced the financing plan Wednesday, prompting Fitch Ratings to cut G.M.’s unsecured debt rating.þþ“G.M. may be able to use the proceeds to provide for a strike fund — allowing it to survive at least a short strike,” Mr. Johnson wrote in the note to clients.þþ
Source: NY Times
