Wild Ride in DPH today

[HenryTo]

A wild ride in DPH today. Disclosure: We just went short on the spike sometime this morning. Not planning to hold for long, though. Disclaimer: Please note that this is not a recommendation to buy or sell the security by any means. Repeat: This is not investment advice and nor will we give any on this board in the future.
-------------------------------------------------------------------------
DJ Delphi Stock, Bonds On Ride As Market Shifts Expectations

09/30/2005
Dow Jones News Services
(Copyright © 2005 Dow Jones & Company, Inc.)

NEW YORK (Dow Jones)--Delphi Corp (DPH) shares and bonds went on a wild ride Friday morning amid market talk that the troubled auto supplier was planning to make a positive announcement.

After the announcement failed to materialize at 11:00 am EDT, which was when it had been expected in the market, the securities sold off in rapid fire, a trader said.

At 11:20 am, Delphi stock was trading at $2.90, up 15.5% on the day but down from an intraday high of $3.53 reached shortly before 11:00 am. Delphi's widely traded 6.550% notes due 2006 recently changed hands at 73 cents on the dollar, up a quarter point on the day but down about two points from their pre-11:00 am intraday high.

Delphi, based in Troy, Mich., is sitting on the precipice of a bankruptcy filing, and its securities have been mired in volatility in recent weeks as investors take bets on the likelihood of a Chapter 11 filing. The world's largest auto supplier is embroiled in three-way talks with former parent General Motors Corp. (GM) and the United Auto Workers in an attempt to restructure its labor and benefit costs outside of court.

Delphi chief executive Robert "Steve" Miller has said repeatedly that a bankruptcy filing is possible before the laws become more onerous on Oct. 17.

-By Simona Covel, Dow Jones Newswires; 201-938-2371; simona.covel@dowjones.com

(END) Dow Jones Newswires

09-30-05 1128ET

[HenryTo]

While the inevitable decline in Delphi bonds is not a market-moving event, it should at least send a signal to the many complacent hedge fund and mutual fund managers out there who are investing in the high yield or emerging markets right now.
-----------------------------------------------------------------------------------
Delphi Bankruptcy
May Provide Jolt
To 'Junk' Market

By SIMONA COVEL, RAMEZ MIKDASHI and TOM SULLIVAN
DOW JONES NEWSWIRES
October 10, 2005; Page C4

NEW YORK -- The high-yield and credit-derivatives markets are facing their next auto-related jolt this week -- this time from Delphi Corp., which Saturday filed for bankruptcy-court protection in New York.

While the bankruptcy filing was expected -- Delphi Chief Executive Robert Miller had repeatedly flagged such an outcome -- and had been weighing on the high-yield market in recent weeks, the actual event itself could add further pressure, with Delphi's already-swooning bonds expected to plummet further.

And because of Delphi's prevalence in structured-finance products, the Troy, Mich., auto-parts supplier's filing also may cause headaches in this market, which repackages corporate-debt derivatives into new securities with different risk levels and returns.

The bankruptcy filing applies only to Delphi's U.S. operating subsidiaries.

Delphi had been seeking concessions from the United Auto Workers and a bailout from former parent General Motors Corp., but Saturday Delphi said it had been unable to reach an agreement and decided to file for protection under Chapter 11 of the U.S. Bankruptcy Code while it still had sufficient cash on hand.

Delphi's bonds have been volatile, but last week the selloff built steam as a bankruptcy filing appeared ever more likely, and both Fitch Ratings and Standard & Poor's Ratings Group cut the auto supplier's credit ratings ever closer to default levels.

Friday, Delphi's widely traded 6.55% bonds due in 2006 fell 6½ points to just under 63 cents on the dollar, according to MarketAxess, an electronic-trading system for corporate bonds. For the week, the bonds were down 11¼ points. And there is more to come: Market participants expect the bonds to drop at least 10 points, or cents on the dollar, as investors factor in how much they will be able to recover on their initial investment. Fixed-income markets in the U.S. are closed today for Columbus Day, though corporate bonds, which trade over the counter, trade at all times.

"In a Chapter 11 scenario, recovery values are well below where the bonds are presently trading," high-yield research firm KDP Investment Advisors of Montpelier, Vt., warned in a research note published Friday. The firm issued a "sell" recommendation on Delphi bonds.

Delphi has nearly $3 billion in unsecured and subordinated debt outstanding.

The overall high-yield market is likely to suffer, too. In the past months, the market has been battered by the deteriorating credit quality of auto companies GM and Ford Motor Co. as well as a number of auto-parts suppliers. Rising interest rates, worries about the economic outlook amid soaring gasoline prices and the beginning of an uptick in corporate-default rates also have depressed investor appetite for risky bonds.

Sasha Kamper, senior fixed-income analyst at Principal Global Investors in Des Moines, Iowa, said a Delphi filing is "a market event," but that the reaction is likely to last only a couple of days. And it pales in comparison with the last single event that really shook the market -- the simultaneous rating downgrades of Ford and GM to "junk" status in May.

Other auto-parts suppliers -- those that carry junk ratings and the few left with investment-grade ratings -- undoubtedly also will see more selling in the wake of Delphi's filing, and the auto-parts companies that would really suffer the most are Delphi's suppliers. Many of those companies are small, however, without public debt.

Investors in synthetic collateralized debt obligations which are based on credit-default swaps -- the insurance-like products that protect debt investors against default -- will also be eyeing the knock-on effects of the Delphi bankruptcy.

A Delphi default "shouldn't have a dramatic effect on its own. The effect will come if a default ripples into wider auto-sector ratings downgrades," said Mitch Janowski, who runs correlation trading globally at Citigroup. He made his comments before Delphi filed for protection from creditors.

Friday, Treasurys staged a robust reversal into the close, with most prices ending modestly higher after an initial battering from better-than-expected September jobs data.

The 10-year note rose 5/32, or $1.56 per $1,000 face value, to 99 5/32. Its yield fell to 4.358%. The 30-year bond rose 17/32 to yield 4.568%

The market closed early Friday for the Columbus Day weekend.

Write to Simona Covel at simona.covel@dowjones.com, Ramez Mikdashi at ramez.mikdashi@dowjones.com and Tom Sullivan at tom.sullivan@dowjones.com

[HenryTo]

Folks, this is definitely the end of the era. The stronghold of unionization in the auto sector is now effectively over.
--------------------------------------------------------------------------
Top U.S. auto supplier Delphi files for bankruptcy
Sat Oct 8, 2005 2:57 PM ET

By David Bailey

CHICAGO, Oct 8 (Reuters) - Auto parts maker Delphi Corp. (DPH.N: Quote, Profile, Research) filed for bankruptcy on Saturday, hurt by high wage and benefit costs. It was the biggest bankruptcy filing in U.S. automotive history and promises to have a broad impact across the industry.

The largest U.S. auto parts supplier filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in New York. Non-U.S. subsidiaries were not included in the filing.

The Troy, Michigan-based company has struggled since it was spun off from former parent General Motors Corp. (GM.N: Quote, Profile, Research) in 1999, posting net losses of $741 million in the first half of 2005 alone. It had sought financing from GM and sharp cuts in wages and benefits from the United Auto Workers union to restructure unprofitable U.S. operations.

The bankruptcy filing potentially allows steep cuts in wages, benefits and jobs to go forward without the UAW's approval, marking a big setback for the trade union. The filing also likely will add to deepening financial woes at GM, which shares many of the problems that drove Delphi into Chapter 11.

"We are going to be taking a hard look at every line of business," Chief Executive Steve Miller said.

Delphi, which makes almost every component found on a car, had about 185,200 employees worldwide at the end of 2004, including 147,900 hourly workers. Nearly 75 percent of hourly workers were union-represented, including 25,200 by the UAW in the United States.

Reports from UAW local units in the past few days saying Delphi proposed to cut wages by more than half to $10 or $12 per hour were "directionally correct," Miller said.

'A SIGNIFICANT REDUCTION'

"I've been saying from day one that we need to be competitive with other suppliers or we will simply go out of business," Miller said.

He spoke of "a significant reduction" in U.S. employment but declined to specify how deep the cuts would go.

The parts maker's petition listed total assets of $17.1 billion as of Aug. 31 and debts totaling $22.17 billion. Delphi had revenue of $28.6 billion in 2004, including $12.7 billion from GM in North America.

Delphi said it expects to make substantial cuts in its U.S. manufacturing operations. It plans to finance its operations with $4.5 billion in debt facilities, plus other committed and uncommitted financing lines.

Delphi has arranged for $2 billion of debtor-in-possession financing from a group of lenders led by Citigroup Inc. (C.N: Quote, Profile, Research) and JPMorgan Chase & Co. (JPM.N: Quote, Profile, Research).

A Delphi bankruptcy is among the 15 largest since 1980, according to the BankruptcyData.com Web site, based on total assets of about $16.6 billion at the end of 2004.

Delphi said it plans to emerge from bankruptcy in early to mid-2007 after substantially cutting its U.S. manufacturing operations, and modifying labor agreements to reduce wages and benefits.

Under the terms of its spinoff, GM may be liable for assuming pension and retiree benefits for UAW workers at Delphi, though analyst forecasts for the true cost to GM have varied broadly in the range of billions of dollars.

IMPACT ON GM UNWELCOME

David Healy, analyst with Burnham Securities said GM will probably continue to get parts from Delphi on time, but the financial impact of the bankruptcy on the automaker "should run into several billion dollars."

"It's not going to kill GM, but it's certainly not welcome," Healy said.

In a statement, GM said the Delphi restructuring could "create operating and financial risks for GM," but added that even with the filing it would not necessarily be liable for post-retirement health care and pension benefits for Delphi employees.

Delphi hired Miller, a turnaround specialist, as chief executive and chairman effective in July with the aim to restructure outside bankruptcy with the help of GM and the UAW. However, the transaction proved too complex, Miller said.

Bankruptcy law allows a debtor to seek the rejection of labor contracts and impose wage and benefit cuts, but in most cases issues are resolved before a company asks a judge to take that step, said Miller, who previously served as nonexecutive chairman at bankrupt auto parts maker Federal-Mogul Corp. (FDMLQ.OB: Quote, Profile, Research) and as chief executive of Bethlehem Steel.

Delphi is the third large U.S. parts supplier to file for bankruptcy protection in 2005 after auto interiors producer Collins & Aikman Corp. (CKCRQ.PK: Quote, Profile, Research) in May and auto body frames producer Tower Automotive Inc. (TWRAQ.PK: Quote, Profile, Research) in February. (Additional reporting by Ilaina Jonas in New York and Poornima Gupta in Detroit)

[HenryTo]

Well, I covered 30% of our short position of DPH at 2.25 this morning, and the rest later at 2.55. I admit that I don't understand the situation well enough to determine whether they will file for bk or not. If not, then I can lose my shirt here by continuing to hold on to our shorts.

Good luck,

Henry

[HenryTo]

Latest from the NY Times - the details are still very sketchy at the moment. Organized labor continues to go the way of the dinosaur. The proliferation of hedge fund funds - the new providers of "efficiency" capital - will put the final nail in the coffin towards the later parts of this decade.
-----------------------------------------------------------------------------------
October 5, 2005
Delphi Ready to Seek Bankruptcy
By DANNY HAKIM
DETROIT, Oct. 4 - Delphi, the nation's largest supplier of auto parts, is prepared to file for bankruptcy as early as this week, lining up lawyers and consultants in preparation for what would be the domestic auto industry's largest filing in recent times.

Whether Robert S. Miller, Delphi's chief executive for three months, actually goes through with it remains to be seen. Mr. Miller has said publicly that he will file for bankruptcy by Oct. 17 at the latest, when bankruptcy laws change, unless General Motors, Delphi's former parent, and the United Automobile Workers union agree to what would be a multibillion-dollar bailout. The parties have been conducting discussions for months.

Spun off from G.M. in 1999, Delphi ranks 63rd on the Fortune 500 list, employs nearly 50,000 people and makes parts, like air bags and instrument panels, for most of the new cars and trucks sold in the United States. A bankruptcy filing would have painful ramifications for G.M., because the automaker agreed under the terms of its spinoff to provide medical and pension benefits to Delphi retirees if the company went bankrupt before mid-2007.

Few doubt that Mr. Miller is serious; he is an executive hired by boards to turn around distressed corporations. Previously, he was in top positions at Bethlehem Steel and Federal Mogul when they filed for bankruptcy. Mr. Miller has made clear that he would prefer a settlement, but if one is not near by Oct. 17, he will file under current laws, which he said were far more favorable.

His latest move came Monday, when Delphi appointed David Sherbin, who worked with Mr. Miller as Federal Mogul's general counsel, to serve in the same capacity for Delphi. Mr. Sherbin took over for Logan G. Robinson, who was named special counsel for restructuring.

"As activities increase either outside of, or within, a filing under Chapter 11 protection of the U.S. Bankruptcy Code, we need increased support to address the complex legal issues ahead of us," Mr. Miller said.

Delphi's imminent overhaul is the strongest indication yet that the upheavals that rocked the steel and airline industries are unfolding in the domestic auto industry. Already, smaller suppliers have been tumbling into bankruptcy and big investors like Kirk Kerkorian, Carl C. Icahn and Wilbur Ross are sifting through the pieces looking for potential turnarounds.

"Bankruptcy is nothing but a process," said Mr. Miller, in a recent interview. "It's an organized way to deal with your issues, and if you can get all the people who are necessary to a decision into one room, why do you need a judge?"

"There are some advantages for all of us to not going through Chapter 11," he said, "but we'll see whether we're smart enough to figure that out."

Executives at Delphi, G.M. and the union have declined to provide details of the talks.

"This is a sign that the industry will have to undergo a long-awaited restructuring," John A. Casesa, an analyst at Merrill Lynch, said of Delphi's situation. "In some ways the auto industry is the last bastion of the traditional postwar labor movement in the United States. There's really no other industry in the U.S. that has escaped the effects of globalization, and it is finally catching up with Detroit.

"The fact is, companies in the United States can't afford to pay people $70 an hour in wages and benefits to make auto parts when they can be made in Mexico, China and Taiwan for a fraction of that."

Because Delphi remains dependent on G.M. for so much of its business, it has suffered along with its former parent. Delphi lost $4.8 billion last year and another $747 million in the first half of this year. An accounting scandal led to a purge of its executive suites, including the early retirement of the chairman and chief executive, J. T. Battenberg III.

With his company's cash dwindling, Mr. Miller is asking the union to agree to an overhaul of health and labor benefits, including a major reduction in retirees' medical benefits and the closing of the jobs bank, which allows employees without work to still collect pay and benefits.

"I don't see any way we can support an ongoing jobs bank," Mr. Miller said, adding, "It's now at $100 million per quarter, so there are all kinds of things other than wages that need to be dealt with here."

Also, Delphi has reported that its pension obligations on behalf of its workers exceed its plan assets by $4 billion, according to its financial filings at the end of 2004. A calculation by the Pension Benefit Guaranty Corporation, obtained by The New York Times through the Freedom of Information Act, suggests that Delphi's shortfall, at $10.9 billion, would be much larger than it claims, if the plan were terminated today.

The numbers differ because Delphi, like other companies, bases its calculation on the assumption that its plan will continue, while the government calculation envisions the plan's being terminated.

The government says that in Delphi's case, that perspective is more realistic because companies - like Delphi - with credit ratings below investment grade are more likely to terminate their pension plans.

Delphi does have an option that most troubled companies do not have: it can turn to G.M. under a promise G.M. made to the union several years ago, to pay for any pension benefits earned by Delphi's unionized workers that the federal pension insurance program will not cover in a termination. The insurance program has limits, and many of Delphi's unionized workers have probably earned benefits that exceed them because their plan promises a type of early-retirement benefit that the government does not cover.

That means that if Delphi does terminate its pension plan, G.M. will be liable for part of the shortfall. The government did not provide an estimate of how much. But of the $10.9 billion total shortfall it estimated for Delphi, it calculated that $7.5 billion stems from the union plan.

Analysts are divided about whether the parties will strike a deal and avert a Delphi bankruptcy filing, but the effects of a bankruptcy would be profound.

Gerald Meyers, a University of Michigan professor and a former auto executive, said a Delphi bankruptcy would come as a jolt to the labor movement.

"It would inject a healthy ration of adrenaline, or anxiety, into the whole industrial labor movement," he said. "It would say that a tool of dealing with reticent labor would be to throw it in the hands of a bankruptcy judge."

Brian Johnson, an analyst at Sanford C. Bernstein, said a Delphi filing could allow the auto industry to impose the kinds of wage and benefit cuts it should have made decades ago.

"For Delphi to go the way of bankruptcy is simply getting the wages and benefits to where the market will allow them, in a painful way," he said. "It's a choice a consumer has between driving a Hyundai Sonata with satellite radio as a standard option versus driving a Chevrolet Malibu which has social welfare as standard equipment."

Jeremy W. Peters contributed reporting from Detroit for this article, and Mary Williams Walsh from New York.

[HenryTo]

Found the following on the yahoo message board for DPH. Disclosure: Stuff being posted on the yahoo board is generally not too reliable - so either do your own research or take this with a grain of salt. I have not looked into this so far. By the way, O'Neal is actually the President of Delphi, not the CEO.
---------------------------------------------------------------------------
A key observation
by: descerne 10/02/05 12:52 pm
Msg: 18279 of 18281

In going over Delphi's annual report and web page, I observe that only one director (O'Neal- the CEO)owns a material amount of Delphi stock. None of the other nine directors own a material amount of stock.
The implication of this is that they are not in the same boat as Delpi stock holders. They will lose nothing if Delpi files bankruptcy. They coundn't care less about Stockholder interests. Who voted for these guys? This is screwed up.

Ack
The few directors who previously did own Delpi stock all resigned in the past year(s), Battenberg, Dawes, Runkle and Wohleen. Was this in self interest so they could liquidate their Delpi holdings with out it being an insider transaction. Very suspicious.

A further observation is that none of the officers nor directors of GM own any Delphi stock, eventhough as you know, Delphi is a spin off from GM 6 years ago where all GM stock holders at that time got Delphi stock.

[nodoodahs]

It's not the only stock where financial troubles and "roller coaster" have collided in the last couple of days. Check CPN and FNM.

The thing about roller coasters is, while they are fun, they almost always end at a lower elevation then the one where the ride started to get interesting ...
_________________
I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.