Thread: GM (Government Motors) Closes Pontiac and Saturn.

GM pushed closer to bankruptcy filing_English_Xinhua

GM pushed closer to bankruptcy filing
English_Xinhua 2009-05-28 04:01:40 Print
by Xinhua writer Hu Guangyao

CHICAGO, May 27 (Xinhua) -- With bondholders refusing to swap debt for a 10-percent stake, the largest U.S. automaker General Motors Corps. has been pushed closer to a bankruptcy filing.

According to GM sources, the number of bondholders who agreed to swap debt for a 10-percent stake in the company was "substantially less" than the 90 percent mandated by the U.S. Treasury Department, which has loaned GM 19.4 billion U.S. dollars in a taxpayer money bailout.


A GM inflatable sign is seen during the Barrett-Jackson auto auction in West Palm Beach, Florida April 11, 2009. (Xinhua/Reuters photo)

GM's offer, which expired at midnight on Tuesday, was widely viewed as unlikely to tempt GM's unsecured bondholders to exchange about 24 billion U.S. dollars in debt for a 10-percent piece of the restructured automaker.

The failed exchange could force GM to file Chapter 11 bankruptcy by Monday, the deadline by which the automaker was required to restructure and reach money-saving concessions with the United Auto Workers union and bondholders.

In a statement issued on Wednesday, GM said: "the GM Board of Directors will be meeting to discuss GM's next steps in light of the expiration of the exchange offers."

According to reports, in early trading, shares of GM were down 17 cents, or 11.7 percent, to 1.27 U.S. dollars.

It was reported that there had been a small hope that GM could avoid a bankruptcy filing when the United Auto Workers union made concessions to GM. The auto union disclosed on Tuesday that it would take a 20-percent stake in GM, down from the original plan of 39 percent. That seemingly freed 19 percent of the Detroit-based company's shares to sweeten the pot for its recalcitrant bondholders.

As the bondholder deal did not go through, the equity freed by the auto union deal now apparently will go to the U.S. government, which may have to commit billions more for GM's restructuring in court.

The government's stake in the company originally was to be 50 percent. But it now could be as high as 69 percent.

GM's offer was expected to fail considering a committee representing some of GM's largest bondholders have called the offer unfair and countered with a proposal that would give them a 58-percent stake in the company.


A General Motors dealership is seen in Vienna, Virginia, May 27, 2009. General Motors Corp moved closer to filing the largest U.S. industrial bankruptcy after a crucial bond exchange proposal failed and as officials in Germany neared a decision on which company would take over GM's European brand, Opel.(Xinhua/Reuters Photo)

According to experts in the U.S. auto industry, regardless of the results, GM needs to file Chapter 11 bankruptcy to become a profitable company. A bankruptcy filing would help GM restructure debt, shrink its dealer network, shed unprofitable assets and dispose of machinery and equipment.

If GM files bankruptcy, the automaker is expected to receive about 30 billion U.S. dollars in debtor-in-possession financing and exit financing.

Bondholders rank below GM's 6 billion U.S. dollars in senior secured debt and the government's nearly 21 billion U.S. dollars in debt, so in a liquidation of GM they would get nothing or something unbelievably small, a person familiar with the matter told Detroit News.

According to reports, the U.S. government, even if it receives a 70-percent equity stake in GM, would not exercise day to day control over GM's operations or make decisions on where GM's headquarters would be placed.

The Treasury will not appoint government employees to GM's board, but is helping GM to reconstitute its board of directors and will have the right to appoint some directors, as it does with the deal it has with Chrysler LLC.

It is reported that the Obama administration, in its planning for a GM bankruptcy if no deal is reached with bondholders, is prepared to lend the company an additional 30 billion U.S. dollars, bringing the total U.S. investment in the automaker to 45 billion U.S. dollars.

Editor: Mu Xuequan

Originally Posted by gunnut

Now it's just another bland GM label. The Saturn Outlook is the same car as the Buick Enclave and the GMC Acadia. Why make the same car 3 times?

well toyota is doing it, land cruiser-lx570, nissan used to do it, pathfinder-qx4.
acura of canada has a acura badged civic-csx.
badge engeneering isn,t bad if done in right amounts

Originally Posted by snowhole

GM pushed closer to bankruptcy filing_English_Xinhua

Game changed overnight: bondholders settle for stock and warrants. Last gasp of independent management, it appears.

Originally Posted by omon

well toyota is doing it, land cruiser-lx570, nissan used to do it, pathfinder-qx4.
acura of canada has a acura badged civic-csx.
badge engeneering isn,t bad if done in right amounts

Oh yeah I agree. Everything has to be in moderation. GM had 8 brands. That, to me, was beyond moderation.

Why don't we let UAW have GM? If they think they are so good to the workers and think running business is easy, let them deal with their own pension. How bad can it be? We have public employees unions controlling the government officials in charge of their contracts.

washingtonpost.com

Government Motors
GM's new owner (the Obama administration) should stop bullying the company's bondholders.
Tuesday, May 26, 2009

IN THEORY, a government bailout should provide a short-term infusion of cash to give a struggling company the chance to right itself. But in its aggressive dealings with U.S. automakers, most recently General Motors, the Obama administration is coming dangerously close to engaging in financial engineering that ignores basic principles of fairness and economic realities to further political goals.

It is now clear that there is no real difference between the government and the entity that identifies itself as GM. For all intents and purposes, the government, which is set to assume a 50 percent equity stake in the company, is GM, and it has been calling the shots in negotiations with creditors. While the Obama administration has been playing hardball with bondholders, it has been more than happy to play nice with the United Auto Workers. How else to explain why a retiree health-care fund controlled by the UAW is slated to get a 39 percent equity stake in GM for its remaining $10 billion in claims while bondholders are being pressured to take a 10 percent stake for their $27 billion? It's highly unlikely that the auto industry professionals at GM would have cut such a deal had the government not been standing over them -- or providing the steady stream of taxpayer dollars needed to keep the factory doors open.

GM is widely expected to file for bankruptcy before the end of this month. If this were a typical bankruptcy, the company would be allowed by law to tear up its UAW collective bargaining agreement and negotiate for drastically reduced wages and benefits. That's not going happen. Phrased another way: The government won't let that happen. Still, the threat of a contract abrogation probably played a role in the union's agreement to cost-cutting measures last week. (The details of the deal have not been made public; union members are scheduled to vote on the proposal early this week.) It's never easy for unions to make concessions, but the sting of handing back money is being softened by the government's desire to give the union a huge ownership stake in GM. Might bondholders be more willing to agree to the kind of quick restructuring the government hopes for if they had been treated more fairly from the outset?

The administration argues that it could not risk alienating the union for fear of triggering a walkout that could permanently cripple GM. It also posits that it had to agree to protect suppliers and fund warranties in order to preserve jobs and reassure prospective buyers that their cars would be serviced. These are legitimate concerns. But it's too bad that the Obama administration has not thought more deeply about how its bullying of bondholders could convince future investors that the last thing they want to do is put money into any company that the government has -- or could -- become involved in.

Iconic U.S. auto giant GM declares bankruptcy_English_Xinhua

Iconic U.S. auto giant GM declares bankruptcy
English_Xinhua 2009-06-01 20:09:25 Print


·General Motors Corp., the top U.S. automaker, filed for bankruptcy protection Monday.
·GM will close 11 U.S. factories and idle three others to slash its operating costs.
·The GM bankruptcy, along with the previous one of Chrysler, will also lead to the loss of hundreds of dealers and suppliers as well as hundreds of thousands of jobs.

NEW YORK, June 1 (Xinhua) -- In the largest industrial bankruptcy ever seen in U.S. history, General Motors Corp., the top U.S. automaker and once the world's largest corporation, filed for bankruptcy protection on Monday.


The logo of General Motors Corp. (GM) is seen outside the GM headquarters in Detroit, the United States, May 29, 2009. The largest U.S. automaker, General Motors Corp., officially filed for bankruptcy protection at 8 a.m. EDT (1200 GMT) on Monday, the largest bankruptcy protection case in the U.S. industrial history. (Xinhua/Gu Xinrong)


The Detroit-based company, for decades a symbol of American manufacturing supremacy, corporate culture and even lifestyle, filed a Chapter 11 petition to the U.S. Bankruptcy Court for the Southern District of New York.

The collapse of the century-old auto giant came at a time when the United States is experiencing the worst economic recession since the Great Depression. Just a month ago, Chrysler LLC, the country's third largest automaker, took the same path.


The logo of General Motors Corp. (GM) is seen in front of the GM headquarters in Detroit, the United States, April 15, 2009. The largest U.S. automaker, General Motors Corp., officially filed for bankruptcy protection at 8 a.m. EDT (1200 GMT) on Monday, the largest bankruptcy protection case in the U.S. industrial history. (Xinhua/Gu Xinrong)

Hoping to reemerge from bankruptcy protection as a new, leaner company within 60 to 90 days, GM will close 11 U.S. factories and idle three others to slash its operating costs. It has been looking to cut 21,000 factory jobs from the 54,000 workers it now employs in the United States.

The GM bankruptcy, along with the previous one of Chrysler, will also lead to the loss of hundreds of dealers and suppliers as well as hundreds of thousands of jobs, dampening U.S. President Barack Obama and his administration's efforts to stimulate the slumping economy.


A piece of news about the General Motors Corp. filing for bankruptcy protection is seen on the front page of a newspaper in Detroit, the United States, June 1, 2009. The largest U.S. automaker, General Motors Corp., officially filed for bankruptcy protection at 8 a.m. EDT (1200 GMT) on Monday, the largest bankruptcy protection case in the U.S. industrial history. (Xinhua/Gu Xinrong)

However, an overnight statement from GM China to Xinhua said that the impact of its U.S. parent's bankruptcy "will be minimal to our China business including our operations and sales."

"We will maintain our normal business operations, including our suppliers system, dealers, warranty and customer support operations," it added.