GM to declare bankruptcy

[KanadaHye]

GM moves step closer to bankruptcy

Company announces that few bondholders were interested in a plan to swap debt for stock. New ownership stakes take shape: U.S. to get nearly 70%.

NEW YORK (CNNMoney.com) -- General Motors said Wednesday that it has fallen far short of the bondholder support it needed for its proposed debt-for-stock offer, virtually guaranteeing that the nation's largest automaker will be forced to file for bankruptcy court protection within the next five days.

The bondholders were not satisfied with the prospect of owning only 10% of the company when the U.S. government would own nearly 70% and a union-controlled trust fund up to 20%.

The bondholders own $27 billion in corporate notes. GM (GM, Fortune 500) needed owners of 90% of those bonds to accept stock in return for the debt in order to reduce its interest expenses to a more manageable level.

But GM's announcement said that bondholders who took the company's offer were "substantially less than the amount required."

The company owes the bondholders $1 billion in interest payments on June 1 - money it says it does not have.

The company also faces a June 1 deadline to win concessions from its union, creditors and other parties or be forced into bankruptcy by the U.S. Treasury Department, which is funding GM's operations through direct federal help.

"The GM board of directors will be meeting to discuss GM's next steps in light of the expiration of the exchange offers," said the company's statement.

You can read the rest here (or any other news site for that matter)http://money.cnn.com/2009/05/27/news...ion=2009052707

[KanadaHye]

Re: GM to declare bankruptcy

GM stock falls below $1
Automaker slides as low as 87 cents as investors brace for expected bankruptcy filing.


NEW YORK (CNNMoney.com) -- General Motors' stock price plunged below $1 a share in Friday trading, reaching its lowest level since the Great Depression, as investors anticipated a bankruptcy filing by the beleaguered automaker.

GM (GM, Fortune 500) stock fell as low as 87 cents, more than 22%, rebounding to 88 cents at 11:49 a.m. ET. The stock closed at $1.12 on Thursday.

GM's stock has been flirting with 1930s-era prices in recent months as a bankruptcy seemed inevitable. The stock touched $1 in intraday trading on May 13, and hasn't closed that low since April 19, 1933.

As recently as 2007, the stock was trading above $40 a share. The Detroit-based automaker's stock price peaked on April 28, 2000, when it closed at $93.63. At the time, auto sales were at a record high.

More recently, the automakers have been struggling to survive under the weight of the recession and high fuel prices, which have drastically reduced sales.

GM is expected to file for bankruptcy next week, despite an agreement reached Thursday with the Treasury Department and a committee of major bondholders.

Chrysler, another of the Big Three automakers, filed for bankruptcy April 30 and is awaiting a ruling from Judge Arthur Gonzalez of the U.S. Bankruptcy Court in New York, where proceedings have been underway this week.

[hipeter924]

Re: GM to declare bankruptcy

Not surprised. They left the same incompetent board in charge.

[KanadaHye]

Re: GM to declare bankruptcy

Not surprised. They left the same incompetent board in charge.

It seems to be more of a planned bankruptcy than a surprise. A brilliant way to take wealth away from share holders and tax payers.


GM bankruptcy: End of an era

After years of losses, the troubled automaker is forced into bankruptcy. GM is set to close a dozen facilities and cut more than 20,000 jobs.

NEW YORK (CNNMoney.com) -- General Motors filed for bankruptcy protection early Monday, a move once viewed as unthinkable that became inevitable after years of losses and market share declines which were capped by a dramatic plunge in sales in recent months.

In the end, even $19.4 billion in federal help wasn't enough to keep the nation's largest automaker out of bankruptcy. The government will pour another $30 billion into GM to fund operations during its reorganization.

Taxpayers will end up with a 60% stake in GM, with the union, its creditors and federal and provincial governments in Canada owning the remainder of the company.

Owners of GM cars should see little change as a result of the bankruptcy since warranties will still be honored. But there will be plenty of pain caused by the bankruptcy and the company's efforts to stem losses.

GM will shed its Pontiac, Saturn, Hummer and Saab brands and cut loose more than 2,000 of its 6,000 U.S. dealerships by next year. That could result in more than 100,000 additional job losses if those dealerships are forced to close.

A dozen facilities were identified for closure, resulting in 20,000 job losses. Assembly lines in Pontiac, Mich., which make full-size pickup trucks, will be closed later this year. A Wilmington, Del.-based plant that makes roadsters for the Pontiac and Saturn brands, will also close later this year.

Three parts distribution warehouses are set to close at the end of this year, while five engine plants and a stamping plant are due to close in 2010. An additional stamping plant is set to close in 2011.

Three more plants. including assembly lines in Spring Hill, Tenn., and Orion, Mich.,are set to be idled and put on stand by status in hopes for a rebound in sales that may never come.

Pain for retirees, investors
More than 650,000 retirees and their family members who depend on the company for health insurance will experience cutbacks in their coverage, although their pension benefits are unaffected for now.

Investors in $27 billion's worth of GM bonds, including mutual funds and thousands of individual investors, will end up with new stock in a reorganized GM worth a fraction of their original investment.

Owners of current GM (GM, Fortune 500) shares, which closed at just 75 cents a share on Friday, will have their investments essentially wiped out.

Officials from the Obama administration and the United Auto Workers union both have said they hope to sell their stakes in GM as soon as possible, but it is likely that shares of the new GM will not be publicly traded for at least a year or two.

The bankruptcy filing will also spark the removal as of June 8 of GM from the Dow Jones industrial average, a distinction it has held since 1925. The company will be replaced in the Dow by technology giant Cisco Systems (CSCO, Fortune 500), Dow Jones said.

President Obama is due to address the nation later Monday to make the case why the bankruptcy and the additional federal help was necessary. CEO Fritz Henderson, who is expected to continue running the company, will speak in New York shortly after the president finishes his remarks.

GM and the Treasury Department were able to get key concessions from the unions and major bondholders in the past two weeks. Those deals paved the way for a cleaner bankruptcy process, one that a senior administration official said Sunday could allow GM to emerge from the bankruptcy process in only two to three months.

GM faced a deadline from the Treasury Department to come up with a plan to turnaround the company or file for bankruptcy by June 1. The company also owed its bondholders $1 billion in interest payments on June 1, money it did not have available to pay.

According to GM's bankruptcy filing , the company has assets of $82.3 billion, and liabilities of $172.8 billion. That would make GM the fourth largest U.S. bankruptcy on record, according to Bankruptcydata.com, just behind the 2002 bankruptcy of telecom WorldCom.

Three of the largest bankruptcies in history - GM, Wall Street investment bank Lehman Brothers and savings and loan Washington Mutual, have occurred in the last nine months.

Plans for a 'new' GM
GM will use the trip into bankruptcy court to shed the plants, dealerships, debt and other liabilities it can no longer afford. Emerging out of bankruptcy quickly will be a "new GM," made up of the four brands that GM will keep in the U.S. market -- Chevrolet, Cadillac, GMC and Buick -- as well as many of its more successful overseas operations.

This is the same process that Chrysler LLC used in its bankruptcy process. Chrysler filed for bankruptcy April 30, and the judge in that case approved the creation of a new company that will be run by Italian automaker Fiat in a ruling Sunday.

GM, being a larger, more complicated and global company than Chrysler, is not expected to have its valuable units exit bankruptcy quite as quickly, though.

The new GM will have only $17 billion in debt, rather than the $54.4 billion it owed as of March 31. The unions' new contracts with the company and GM's underfunded pension funds will stay with the new company.

But for the turnaround to be successful, both outside experts and company officials agree there needs to be improvement in U.S. auto sales, which have fallen to a 26-year low this year.

Sales plunge the final blow
GM has been hit harder than most of its competitors during the sales slump. The company's U.S. sales through April were down 45% from a year ago, compared to a 37% decline for the overall industry.

GM also faces tough competition from Toyota Motor (TM) and Ford Motor (F, Fortune 500), which are both in much stronger financial condition.

Even though Ford has reported years of losses as well, it had far more cash on hand than GM or Chrysler going into this crisis. The same is true for Toyota, which reported a loss in its recently completed fiscal year.

GM's decision to shed its weaker brands and dealers is expected to lead to further market share losses, which could result in the company giving up its long-time position as the largest automaker in terms of U.S. sales.

The company already lost the global sales title to Toyota last year, and it could soon fall behind Toyota and possibly Ford in the U.S. as well.

http://money.cnn.com/2009/06/01/news...ex.htm?cnn=yes

[KanadaHye]

Re: GM to declare bankruptcy

GM's roadmap out of bankruptcy

The automaker moved from court filing to court approval of its plans in barely a month. But many steps lay ahead for GM to survive

NEW YORK (CNNMoney.com) -- Thanks to a bankruptcy court decision issued late Sunday night, General Motors is close to making a quick trip through bankruptcy. But that doesn't mean that its reorganization is almost done.

U.S. Bankruptcy Judge Robert Gerber approved plans laid out by GM and the Obama administration for a sale of GM's more valuable assets to a "new GM," which will retain both the company's name and its more profitable brands such as Chevrolet and Cadillac.

Many of its liabilities, including contracts with thousands of dealerships and more than $27 billion in debt to bondholders, will remain part of a continuing bankruptcy proceeding for the old GM.

Now renamed Motors Liquidation Co., the old GM will spend at least two to three years disposing of all those liabilities and finishing up the bankruptcy case.

In short, many steps remain before GM has any chance of becoming a competitive, money-making automaker.

Some issues are outside of its control. Tight credit and a poor economy has sent industrywide U.S. auto sales to levels not seen in decades. A recovery in auto sales is crucial for GM (GMGMQ) and Chrysler Group, which recently exited from bankruptcy itself with financing from the government, to return to the black.


Can read the rest here:
http://money.cnn.com/2009/07/06/news...ion=2009070706

[KanadaHye]

Re: GM to declare bankruptcy

General Motors 'exits bankruptcy'

GM will be majority owned by the US government
General Motors (GM) has emerged from bankruptcy after signing a deal allowing it to sell its best assets to a "new GM", reports say.

News agencies, quoting unnamed sources, reported that the US government and GM signed the documents at 1030 GMT, ending its 40-day bankruptcy.

Official confirmation is expected when GM holds a press conference later.

The new, leaner GM will own the company's key assets such as Buick and will be 61% owned by the US government.

GM is in the process of selling off its other brands such as Hummer, Saab and its GM Europe arm, which owns Vauxhall and Opel.

GM filed for bankruptcy protection on 1 June, saying it would be forced to liquidate if the plan was not approved.

A new, smaller GM is being created with a reduced workforce, smaller dealer network and less debt.

It will operate the strongest parts of the old company, with only its Chevrolet, Cadillac, Buick and GMC brands remaining.

The firm is getting $60bn (£37.3bn) in financing from the US Treasury, which gives the US government a 61% share in the new GM, while the United Auto Workers union will have 17.5%.

Canada's government will have a 12% share and GM bondholders will own about 10% in the new company.

http://news.bbc.co.uk/2/hi/business/8144434.stm
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Government owning what you drive, imagine the possibilities..... welcome to Communist America.

[hipeter924]

Re: GM to declare bankruptcy

He is just a wannabe democratic socialist. I thought Obama was a bit socialist for a while but if anything he leans towards a form of national socialism/fascism due to the personality cult of himself he seems to be developing.