Delphi Steps Back from REIT Plans

The company has three main problems right now with selling preferred stock for the REIT, said Paula Angelo, manager of financial communications for the company. "At this point, we're evaluating the market. We are at some point going to come back with the offering," Angelo told GlobeSt.com. "Also, we had to file with the Securities Exchange Commission, and we're waiting for that review process."

Angelo also admitted that putting out the stock didn't make sense after General Motors Corp. also put out a large offering. The automaker put out a $16.9 billion bond sale at the end of June, putting a damper on the demand Delphi would have received for its REIT offering, Angelo said. "They had a significant bond offering, the largest bond of its sort. There's only so much appetite for automotive offerings out there," she said.

Delphi formed the REIT, known as Delphi Properties Inc., in an attempt to help pay for a $4 billion pension fund debt. The company hopes to raise up to $345 million through the sale of its preferred stock.

Angelo said a REIT is a cost-effective way to raise funds. The REIT would be held up by 14 Delphi properties, Angelo said. Delphi would pay rent on the properties, which would then be filtered to the REIT's stockholders. The company would have the symbol DPS on the New York Stock Exchange.

Delphi is contributing about $250 million out of the company's operating cash flow to the pension fund in the second quarter, she said. The company owed $4 billion to the pension fund at the end of 2002.

Angelo said she could not comment on future plans for the REIT, or whether the REIT would be a smart investment in today's present economy. "Because we are awaiting SEC approval, there's only so much we can discuss about the REIT," Angelo said.

The company's Automotive Holdings Group reported 2001 and 2002 revenues of $3.7 billion and $3.6 billion respectively, and operating losses of ($248) million and ($375) million respectively. Delphi laid off more than 17,000 workers in the last two years, and closed five facilities.