REPORT: General Motors in "intense" bankruptcy preparations

AK370Z

According to an unnamed source speaking with Reuters, General Motors "is in 'intense' and 'earnest' preparations for a possible bankruptcy filing." The report states that GM could be split into two separate entities; one "new" unit consisting of the General's successful brands (read: Chevrolet and Cadillac) and an "old" unit made up of its less-profitable endeavors (Hummer, Saab, Pontiac and Saturn).

If the plan is enacted, the all-new GM would assume some of the debt from the bankruptcy (primarily, unsecured debt) and that GM's bondholders would lose a substantial amount of value if the Chapter 11 filings go through. Naturally, neither source wished to be named, so this is all conjecture at this point, but if GM does declare CH11 within the next month-and-half, expect the Feds to step in to avoid the cataclysmic effect on both suppliers and the economy as a whole.

Source: GM in intense preparations for bankruptcy: source | U.S. | Reuters

__________________
The370Z Signature Pictures ll Want to rock our forum decals on your car? Then click here! ll How to Embed YouTube Videos In a Post
STOP! (Hammertime) ll Become a Premium Member Click HERE ll F.A.Q.
Are You a Nissan Dealer? Click Here to Become A "Supporting Dealer" and Start Listing Your 370Zs In Our Inventory Section
My Monterey Blue Z ll My Exhaust --> My Intake --> G3
Nissan's Official Response Regarding Oil Temp Issue: CLICK HERE
Need a Set of Cheap Winter wheels /Tires? Then Visit The Banner Link Below and Place Your Order. You'll Help Keep The370Z Alive.

nogoodname

this is really getting out of hand now........ but years of lack of improvement came to bite real hard.

Endgame

We knew this was coming. They have been on life support since before Bush left office.

nogoodname

where will i get my Genuine parts for my




just so happens i posted this somewhere else and matches this thread also......ha

molamann

I highly support the split.

ChrisSlicks

Yeah, me too. It will be a good way for them to kill of Hummer, Saab, Pontiac and Saturn and concentrate on the brands that are working. They will come out of it stronger and better.

dad

They need more money! Send them money! Your money, my money, your mother's money!

When do we get some money?

Don't give your change, or dollar bill to the person standing on the corner begging for money! You can't afford too, your pocket is already being picked!

When does the little guy, you and me get some help? How about people now living in tents, who have lost jobs or homes. When will they get help, or a bailout?

The United States Government can't help the little guy, but they can spend trillions of dollars on the US auto industry and AGI!

__________________

We can do without any article of luxury we have never had; but once obtained, it is not in human nature to surrender it voluntary.

BanningZ

^I agree

I don't support the ridiculous capitalism machine of "just let em' fail" but this has just gotten out of hand. No more money should be thrown at them.

Meanwhile we climb another percent in unemployment, people are losing their jobs and GM considers how to make the Volt uglier and less attainable.

Let the apple drop, it may just make a healthy tree once it grows new roots.

__________________
Become a Premium Member: Click HERE

MB 06' Nismo VQ40DE

arcticreaver

this is what happens when you make BAD vehicles. consumers are not stupid.

MC

pontiac is dead

GM to pull the plug on Pontiac car brand - Apr. 24, 2009

__________________
2015 GT-R N1SMO "THE ONE"
Instagram MCGTRN1SMO
Youtube MCGTRNISMO

eXo5

^ my thoughts since they put a V8 in a grand am and called it a GTO. They should have named it the GTFO.

dad

Let's see how many dominoes fall!

__________________

We can do without any article of luxury we have never had; but once obtained, it is not in human nature to surrender it voluntary.

frost

Best thing for them. I wouldn't be surprised if their vehicles go up in quality since they will have a higher profit margin after being able to pay people more appropriately.

dad

GM to cut 21,000 US factory jobs, shed Pontiac

DETROIT – General Motors Corp. could be majority owned by the federal government under a massive restructuring plan laid out Monday that will cut 21,000 U.S. factory jobs by next year and phase out the storied Pontiac brand.

The plan, which includes an offer to swap roughly $27 billion in bond debt for GM stock, would leave current shareholders holding just 1 percent of the century-old company, which is fighting for its life in the worst auto sales climate in 27 years.

GM is living on $15.4 billion in government loans and said Monday in a filing with the U.S. Securities and Exchange Commission that it envisions receiving an additional $11.6 billion. But if GM's restructuring plan can't satisfy the government by June 1, the struggling company could go into bankruptcy protection.

GM said that it will ask the government to take more than 50 percent of its common stock in exchange for canceling half the government loans to the company as of June 1. The swap would cancel about $10 billion in government debt.

In addition, GM is offering stock to the United Auto Workers for at least 50 percent of the $20 billion the company must pay into a union run trust that will take over retiree health care expenses starting next year.

If both are successful, the government and UAW health care trust would own 89 percent of GM stock, with the government holding more than a 50 percent stake, CEO Fritz Henderson said in a news conference at GM's Detroit headquarters.

President Barack Obama's administration said in a statement that the bond exchange filing is an important step in GM's restructuring but the administration has not made a final decision about taking stock for part of its loans.

"The interim plan that GM laid out in this filing reflects the work GM has done since March 30 to chart a new path to financial viability. We will continue to work with GM's management as it refines and finalizes this plan and with all of GM's stakeholders to help GM restructure consistent with the president's commitment to a strong, vibrant American auto industry," the statement said.

Henderson said that although the government would own a majority of GM's outstanding common shares, the Treasury "hasn't demonstrated interest in running the company," but would have someone on the board looking out for the taxpayers' interest. The task force has directed current board chairman Kent Kresa to replace several board members.

"The shareholders, the VEBA (health care trust) and the government would want to have a someone on the board of directors," he said.

Deals with the UAW and the Treasury have yet to be finalized, he said.

The struggling automaker said it will offer 225 shares of common stock for every $1,000 in notes held by bondholders as part of a debt-for-equity swap. Henderson said the objective is to reduce GM's $27 billion of outstanding public debt by about $24 billion. The company estimates that after the exchange, bondholders would own 10 percent of the company.

That would leave current common stockholders with only 1 percent, GM said. Still, GM shares rose 34 cents, or 21 percent, to $2.03 in midday trading.

The plans, if successful, would reduce GM's debt by $44 billion from the present figure of about $62.4 billion.

"We would be substantially less-leveraged as a company," Henderson said.

Kip Penniman Jr., an analyst with KDP Investment Advisors Inc., predicted the exchange offer would fail and GM will file for bankruptcy. The value of all of GM's outstanding stock is about $1.27 billion, so if bondholders get about 10 percent of the equity, the offer is only worth about 5 cents per dollar of GM bonds, he said.

GM's plan depends on 90 percent of bondholders exchanging their debt, and "there is no chance that GM will get anywhere near that participation rate," Penniman said in a research note.

Henderson said if the debt exchange isn't successful, he would expect GM to file for bankruptcy protection somewhere around June 1, but such a filing would be unlikely very long before the deadline. Bondholders have until May 26 to accept the exchange offer.

Henderson said the company still prefers to restructure outside of court, but he acknowledged that the prospect of bankruptcy is more likely now that it was a few weeks ago.

"The task at hand in terms of what we need to get done is formidable," Henderson said. "But it can be done."

GM said it would speed up six additional factory closings that were announced in February, although it did not identify the locations. Additional salaried jobs cuts also are coming, beyond the 3,400 in the U.S. completed last week.

Henderson said there would be three more factory closures in 2010 beyond the six that were previously planned. He expects to identify them by publicly in May. They will include assembly, engine and transmission and parts-stamping factories, he said.

Including previously announced plant closures, the restructuring will leave GM with 34 factories at the end of next year, 13 fewer than the 47 it had at the end of 2008.

Besides the U.S. job cuts, General Motors Canada said it plans to slash its hourly work force to from 10,300 currently to 4,400 by 2014 years.

The company also said it plans to reduce its dealership ranks by 42 percent from 2008 to 2010, cutting them from 6,246 to 3,605. When asked how GM would accomplish that, Henderson would say only that the company would be making offers to the dealers in the coming weeks.

Mark LaNeve, vice president of North American sales and marketing, said a big chunk of the dealership reduction — about 450 — would come with the elimination or sale of Saturn, Hummer and Saab. GM would then look to end relationships with dealers that do only a small volume of business with GM, and then move on to other dealers, he said.

"We've got a cadence plan to it," he said. "I don't want to get rid of any dealers," LaNeve said, but acknowledged that that GM has had more dealers than it needs for quite some time.

Henderson said the new plan lowers GM's break-even point in North America to an annual U.S. sales volume of 10 million vehicles. That's slightly more than the current sales rate, but most economists expect an uptick in the second half of the year.

"This lower break-even point better positions GM to generate positive cash flow and earn an adequate return on capital over the course of a normal business cycle, a requirement set forth by the U.S. Treasury," GM said in a statement.

The company said it would phase out its storied Pontiac brand no later than next year, and the futures of Hummer, Saturn and Saab will be resolved by the end of this year by either selling them or phasing them out.

For Pontiac, the decision means the death of a brand known for its muscle cars including the Trans Am made famous in movies and the GTO, the subject of a nostalgic song by Ronny and the Daytonas.

Henderson said in a news conference that the company was spread too thin to make Pontiac work.

"We didn't think we had the resources to get this done from a product perspective," or marketing, he said.

He said the decision was very tough for many at GM because of the 83-year-old brand's heritage.

Henderson said talks continue with potential parties to buy a stake in Opel and are expected to continue through the end of May. He said the company would continue to have a presence in Europe as a stakeholder. He said Chevrolet is one of the fast-growing car segments in Eastern Europe and Russia.

One of the conditions to get aid from Germany is to have a private investor take a stake in Opel, he said.

__________________

We can do without any article of luxury we have never had; but once obtained, it is not in human nature to surrender it voluntary.

molamann

Are you telling me UAW are getting underpaid?