Delphi's Partial Spinoff Valued at $1.5 Billion

General Motors Corp. expects to raise up to $1.5 billion by selling 15% to 19% of its Delphi Automotive Systems parts unit, in the first quarter of 1999, according to a filing with the Securities and Exchange Commission. The documents provide the first close look at Delphi's goals, financial condition and future relationship with GM.

Sometime before the end of 1999 GM and Delphi plan to distribute the remaining 81% to 85% of Delphi to GM shareholders, either in exchange for GM shares or in a free distribution. Delphi spokesman Stephen Gaut says that decision won't be made until next year.

The filing also disclosed that GM will take a fourth-quarter charge of between $200 million and $250 million as part of Delphi's on-going effort to eliminate uncompetitive factories and surplus workers. Some of those closings and voluntary retirement plans have yet to be announced.

Delphi is the world's largest auto parts maker with annual revenue of $31.4 billion. It employs 204,000 people and operates 200 plants throughout the world. Its products include steering systems, engine controls, electronic sensors, braking systems and other parts and systems.

If it were a stand-alone company, it would rank 25th on the current Fortune 500 list of largest companies, behind Merrill Lynch & Co. and ahead of J.C. Penney Co.

The stock offering would not be the largest ever. DuPont Co. last month spun off its Conoco Inc. subsidiary and raised $4.4 billion.

The primary purpose of the spinoff is to make GM less dependent on Delphi's high-cost parts operations in the U.S. Simultaneously, Delphi will be freer to pursue business with other automakers. Non-GM business now accounts for 18.3% of Delphi's business, according to the SEC filings.

Delphi has not yet met with the United Auto Workers union to discuss the impact of the stock sale. The UAW represents nearly 50,000, or about one-quarter, of Delphi's work force. UAW leaders are opposed to the Delphi separation, but acknowledge privately that they can't stop it.

Thomas H. Wyman, former chairman of CBS Inc. and a GM director, will lead Delphi's board of directors. GM Chairman John F. Smith Jr. and two other as-yet-unnamed GM executives will sit on the board. Outside directors include Shoichiro Irimajiri, president of Sega Enterprises Ltd. and a former Honda Motor Co. executive; John D. Opie, vice chairman of General Electric Co.; Virgis W. Colbert, executive vice president of the Miller Brewing unit of Philip Morris Cos.; Roger S. Penske, chairman and CEO of Detroit Diesel Corp; and Oscar De Paula Bernardes Neto, CEO of Bunge International, a Brazilian food and agribusiness company.