TROY, Mich. (May 14, 2009)—Delphi Corp. posted a $534 million operating loss for the first quarter and warned North American vehicle production cuts may force it to liquidate.
North America's second-biggest automotive supplier—which makes some rubber products, although it has closed a number of rubber-related operations in recent years—has been mired in bankruptcy since Oct 2005. The firm said its next two quarterly reports may show the impact of “dramatically lower production” from extended shutdowns at Chrysler L.L.C. and former parent General Motors Corp.
Delphi's sales revenue in the first three months of the year plunged by more than half.
Chrysler ceased North American production last week after filing for bankruptcy on April 30. GM, whose bankruptcy is growing more probable, plans to shut 13 assembly plants for up to nine weeks beginning this month.
Because of the lower production, Delphi said it can't guarantee it will maintain access to existing financing, get new financing or stay compliant with terms of its bankruptcy financing.
“We may need to sharply curtail operations, including the temporary or permanent shutdown of one or more operations in North America, to remain in compliance,” Delphi said.
“If we cannot remain in compliance, even with such actions, our lenders under the amended and restated debtor-in-possession credit facility may seek to foreclose upon substantially all of our assets and proceed toward a sale or liquidation.”