Delphi Corp., the world's largest maker of auto parts, on Friday confirmed it is talks to restructure its U.S. operations to avoid bankruptcy, and disclosed a large draw down of funds from its $1.8 billion credit line to finance its operations.
The company said it initiated the draw down of $1.5 billion on Wednesday, and is in talks with its principal unions and former parent General Motors Corp. GM spun off Delphi's operations in 1999 and accounts for the bulk of its business.
Shares of Delphi dropped 84 cents, or 14.5 percent, to $4.94 in premarket trading. The stock has traded within a range of $3.20 to $9.63 in the past year.
The Wall Street Journal on Friday reported the company will not be able to continue on its current course through September 2007, when a labor contract expires, if it doesn't reach agreements to cut U.S. labor costs and restructure or sell unprofitable businesses.
In May, the Troy, Mich.-based company posted a first-quarter loss of $409 million, or 74 cents a share, down from earnings of $53 million, or 9 cents a share, a year earlier. At that time, Delphi also said it expected to lose more this year than previously forecast.