NEW YORK/DETROIT (Reuters) - General Motors (GM.N) is in talks to take back large portions of Delphi, the parts supplier spun off by the automaker a decade ago, a source with direct knowledge of the talks said on Monday.
The discussions are part of GM’s strategy to line up additional federal support as it faces a February 17 deadline to prove to the U.S. government it can be made viable, the source told Reuters.
GM, which was granted $13.4 billion (8.98 billion pounds) of government loans in December, intends to submit the discussions with Delphi as part of its viability plan, said the source, who was not authorised to discuss the private talks.
GM and Delphi DPHIQ.PK, could not immediately be reached for comment.
GM said last month it was in discussions with Delphi and Delphi’s stakeholders to resolve financial troubles at the bankrupt supplier as part of its own restructuring plan.
Delphi, which filed for bankruptcy in 2005, has been a major financial drag on GM at a time when the U.S. automaker is struggling to survive a deep downturn in global auto demand.
GM has taken more than $11 billion in charges for Delphi’s reorganisation. GM agreed when it spun Delphi off in 1999 to assume pension and health-care obligations for thousands of union workers should the supplier be unable to do so.
GM started talking to Delphi last month about buying back parts of the supplier, including some plants, the source said.
Delphi has been trying to complete a revised reorganization plan since investors led by Appaloosa Management backed out of a $2.55 billion equity plan to support its reemergence last April.
Reporting by Jui Chakravorty, Writing by Soyoung Kim, editing by Maureen Bavdek