Delphi scraps quarterly dividend

[HenryTo]

The marginal players are now being squeezed left and right...
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Delphi scraps quarterly dividend
Thursday September 8, 5:23 pm ET

NEW YORK (Reuters) - Delphi Corp. (NYSE:DPH - News), which has said it may seek bankruptcy protection, said on Thursday it is eliminating its quarterly common stock dividend for the rest of the year, saving about $8.4 million a quarter.

The largest U.S. auto parts supplier said eliminating the 1.5 cents per share dividend "is the prudent course of action at this time to conserve liquidity during the company's current restructuring discussions," and in light of "challenging U.S. production volumes" at General Motors Corp. (NYSE:GM - News), its largest customer.

Delphi, based in Troy, Michigan, had earlier this year cut its dividend twice, first from 7 cents to 3 cents, and then to 1.5 cents. The cost savings are based on the 561.4 million shares that Delphi reported outstanding as of June 30.

Delphi has struggled since GM spun it off in 1999.

Last month, Delphi said it may have to file for protection from creditors if it fails to slash high wage and benefit costs. The company has been in talks with GM and the United Auto Workers union, and last month said it had begun to draw $1.5 billion from a $1.8 billion revolving credit line.

GM on September 1 said August U.S. vehicle sales fell nearly 17 percent from a year earlier, amid fears that rising gasoline prices will sap future vehicle demand. GM had the prior week extended a popular program under which it sells cars and trucks at the same prices offered to employees through September 30.

Delphi plans to reevaluate its dividend in the first quarter of 2006. Its shares fell 9 cents to $4.40 in after-hours trading on Inet, after rising 10 cents in regular Thursday trading on the New York Stock Exchange.