Delphi granted court OK to implement outsourced network support services agreement

By Jennifer Lanning Drey

Portland, Ore., May 31 - Delphi Corp. was granted court approval of a $325 million to $400 million five-year network support services agreement with Computer Sciences Corp., according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Delphi said previously that the agreement is part of the company's plan to transform its salaried workforce to lower selling, general and administrative expenses.

As previously reported, this agreement is the third in a three-phase IT outsourcing plan that is expected to save the company $256 million.

After roughly $16 million in one-time transition costs, Delphi said it expects to see $71 million in net operating savings over the five-year term of the network support services agreement.

Monthly operating expenses and one-time transition costs will be charged directly or allocated to the Delphi affiliates that use the services, with about 45% of operating and transition costs being borne by Delphi and the rest by non-debtor affiliates.

The specific terms of the agreement were filed under seal.

Delphi, a Troy, Mich.-based automotive electronics manufacturer, filed for bankruptcy on Oct. 8, 2005. Its Chapter 11 case number is 05-44481.

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