Delphi Reveals Strategy for Independent Growth
5 February 1999
Delphi Reveals Strategy for Independent Growth; Outlines Terms of Employee Founder's Grant
NEW YORK, Feb. 5 -- With an initial public offering of
100 million shares, Delphi Automotive Systems today moved a
significant step closer to independence from long-time parent General Motors.
Delphi employees from around the world gathered in the "Delphi Technology
Tent" on Broad Street in front of the New York Stock Exchange, and at Delphi
sites worldwide, to celebrate the IPO. Delphi Chairman, Chief Executive
Officer and President J.T. Battenberg III used the opportunity to lay out the
parameters of a program that will provide all eligible Delphi employees with
an opportunity for ownership in the company through a stock option program.
"Today's IPO represents a significant step toward independence," said
Battenberg. "While we are proud of the heritage we share with General Motors,
the separation should provide increased opportunities for growth as we go
public and seek to expand our sales globally.
"This should be particularly good news to all our employees. Our mutual
ability to better serve the customer is more relevant than ever as we share in
the opportunity to own a portion of the company's stock."
Battenberg explained that the Founder's Grant Program is a one-time
distribution of Delphi stock options to all eligible Delphi employees globally
to align employee and company interests with those of Delphi's new
stockholders, to celebrate completion of the initial public offering, and to
recognize employees' contributions to Delphi's business success.
"For Delphi employees, the separation means they will be part of a new
company among Fortune's top 30 US companies that has tremendous potential for
growth, which will create opportunities for both the hourly and salaried
workforce," said Battenberg.
Other significant benefits of the separation include:
* Increased Non-GM Sales: One of the most significant limitations on
Delphi's ability to expand sales to major Vehicle Manufacturers (VMs)
other than GM has been a general reluctance by such VMs to source from a
supplier owned by GM. The hope is that by separating from GM, this
barrier will be lifted, and Delphi will -- over time -- be able to
substantially grow sales to VMs other than General Motors.
* Capital Planning Flexibility: The separation allows Delphi to make its
financing and capital spending decisions without competing with other GM
sectors for resources to invest in product portfolio and facilities
updates.
* Improved Labor Relations: The separation will enable Delphi to continue
to improve its labor relations, based on a foundation of open
communications.
Delphi, with 1998 annual sales of $28.4 billion, ranks among the top 30 US
companies on Fortune's 500 list, and is the world's most diversified
automotive products and technology supplier. Until today's IPO, Delphi was a
wholly owned subsidiary of General Motors Corporation, which continues to hold
465 million shares.
While General Motors continues to hold over 80% of the remaining stock in
Delphi, GM has said it intends to distribute the remaining shares to GM
shareholders later this year in either a split-off or spin-off, or some
combination of both.
The offering is being made through an underwriting group lead-managed by
Morgan Stanley Dean Witter and co-managed by Goldman, Sachs & Co., Merrill
Lynch & Co., Donaldson, Lufkin & Jenrette, and Schroder & Co. Inc.
A prospectus relating to these securities may be obtained from Morgan
Stanley Dean Witter, 1585 Broadway, New York, NY 10036.
Delphi, with headquarters in Troy, Mich., USA, has more than
200,000 employees and operates 169 wholly owned manufacturing sites, 40 joint
ventures and 27 technical centers in 36 countries. Regional headquarters are
located in Paris, Tokyo and Sao Paulo. Delphi can be found on the Internet at
http://www.delphiauto.com.