**GM preparing for bankruptcy**

[Paxton]

Originally Posted by Gobes32

Good question, where exactly does a bankrupt company find $450 million to build a car in Australia that they already produce in 4 other countries?????

Focus is still going ahead, nothing has changed there.

Ford have the cash to implement local Focus, and other models.

Holden don't have the cash to pay redundancy dues, which is why their second shift staff are still employed at Holden. I still anticipate Cruze, however when GM go into Chapter 11, Holden may be thrown out with the Bath Water, and end up as SAIC, or Chery, or, from left field, Hyundai.

[fpvluver]

good get those rust buckets off the road.
I wonder wat s.a police will do for cop cars???

[vztrt]

Holden 'should' be safe.

http://www.goauto.com.au/mellor/mell...2575BD00160747

GM Holden should be safe, says Reuss

Belt tightening helps to shield Holden from likely GM bankruptcy fallout

By BYRON MATHIOUDAKIS 21 May 2009

GM HOLDEN says local action to cut losses and improve cash flow has bolstered the company against potential fallout from parent company General Motors’ likely Chapter 11 bankruptcy filing in the US.

Holden also says that although the looming restructuring of GM will have at least some impact on Holden operations, plans for small-car production at Elizabeth from next year and an engineering evolution of Holden’s Commodore architecture remain on course.

Speaking to the Australian media launch of its crucial new Cruze small car, Holden chairman and managing director Mark Reuss said Holden had strived to improve its cash flow and cut losses before the global financial crisis hit last year, leaving it in a stronger position than outside observers might suspect.

He said Holden’s new local small car – to be built alongside the VE/WM large car in South Australia – would help to secure the company at both ends of a fast-changing market in which there had been a shift in buyer behaviour around operating costs of large cars.

“In addition to that we have invested very heavily in Commodore to bring operating costs and fuel efficiency and fuel diversity on line, and we’re going to do that with EcoLine right now,” he said.

“And none of those investments or technologies or capabilities or investments have been affected because we had a good plan, and we’re on track to do that.”

Mr Reuss said Holden had gone on the offensive to improve its financial position in the face of tough economic conditions.

“You just can’t sit around and hope that the economy improves,” he said.

Mr Reuss conceded that Holden would be affected in some way by the outcome of GM’s June 1 deadline, but said that impact could not be predicted.

He also emphasised that while GM bankruptcy in the US “will probably happen”, he would “rather it not”.

“At the end of the day, each of the outside entities (GM outposts such as Holden) will be looked at, and we will go from there,” he said “But we feel very good about what we have done here, and where we are in the future.

“But there are no guarantees on any of these; not at all. And we have treated it like that from day one.”

The restructuring of GM had been of “huge value internally”, helping Holden to focus on improving its local operations and not be so reliant on exports.

“To have any entity fully dependent on export markets in this world is probably not the right business model, so we are focussing very heavily on what we are doing today in Australia,” he said.

Mr Reuss said he was confident GM would call on Holden’s expertise in future.

“We are still one of the few places that do right-hand drive (in the world),” he said.

Mr Reuss admitted that Elizabeth plant shift cuts last year had been premised on the likelihood of GM axing its US brand Pontiac, although he denies having confirmation until “... around the time that happened”.

Holden has supplied the VE Commodore-based G8 for Pontiac since 2007.

“When we restructured Adelaide to two crews and a single shift, that was part of that decision, because you don’t make those decisions lightly,” he said.

“We didn’t’ have confirmation that (the Pontiac) brand was going away but because the US business was so dire in that market, we said ‘let’s build the business around zero Pontiac exports until we know what’s going to happen’ and that’s exactly what we did.”

Mr Reuss said that part of his job this month had been to allay dealer fears about the possible implications of a GM US bankruptcy filing.

He said Holden was planning for a successful outcome of the GM restructuring and that “the plan keeps its integrity”.

Mr Reuss is confident that GM may even regain its global number one ranking.

“If this is what it takes to get us to the place where we are generating profit and sales, without a lot of the legacy that has held us back from developing a lot of product the way we know we can and should, then I’m in,” he said. “I can’t wait.”

[Scott]

Not a very confident statement is it? Lots of shoulds/on course/planned/possibles in there.

[vztrt]

Originally Posted by GTP006

Not a very confident statement is it? Lots of shoulds/on course/planned/possibles in there.

By the looks of it they have alot in the pipeline, but if GM go Ch11 then there will be alot of uncertainty.

[Canyonero]

I have been thinking about the future of Holden and their export business. Fiat's takeover of Chrysler looks like it is going ahead and now Fiat are talking about Opel/Vauxhall/Saab as well. Chrysler have their new V6 about to be launched for MY2010 and it has similar specs to the Holden donk. (Hopefully it is a little smoother and quieter the Holden's)

http://en.wikipedia.org/wiki/Chrysler_Phoenix_engine

Holden export their engine to Fiat for use in Alfa Romeo (I think Lancia too) and also to Saab and Opel/Vauxhall. So, if these takeovers occur, then what is the future of Holden's engine export. I can't imagine that Fiat would continue buying them any longer than they are contracted to when they have a very similar engine in house to use.

Has anyone out there heard anything about this?

[Mark s]

Well I guess by reading that the $450 million is already in the hands of Holden and the Cruize will go ahead from the Adelaide plant.

IF all this is true, then it's good news for the Holden employees and the ongoing concerns about jobs and a future or is this just a media spin from GMH with a lets hope and pray.

Still one thing I did read was GM looking at outsourcing from China back to the US and other countries. Where does leave leave Holden the Cruize?




Cheers
Mark

[Wally]

There's rumours the Commodore/Pontiac will be exported into the States.

The Cruize is fully funded.

GMAC are now the preferred finance for Chrysler, per the US Taskforce requirements and the extra $6bn they are about to get.

GM have invested another $1bn in GMAC

[vztrt]

Originally Posted by Wally

There's rumours the Commodore/Pontiac will be exported into the States.

That Holden trying to off load them to the US Police Force?

[eb2fairmont]

Originally Posted by Mark s

With all that is going on in GM world, I have to wonder if Holden will get the funds ($450 million IIRC) from GM to produce this new 4 cyl car at the Elizabeth plant.

Wasn't the deal that the Australian Govt throw in $150 million and the rest would come from the parent company?

With all this doom and gloom in GM world and the bankruptcy just around the corner for the parent, what are the chances of Holden getting these funds from the parent, or are we as the tax payer going to foot the bill for the promised amount?

Was this 4 cyl car going to be a major export for GMH, or was it a local only car to replace the Daewoo triplets?

What does everyone think? Will this project also be on it’s deathbed and what will this also see the slow death of a Commodore as well as a locally produced car?


Will we also see the locally built Focus get given the flick as well? Does anyone know if this is still going ahead?


Cheers
Mark

The local version of the cruze is only going to be 25% local content. That accounts for our unique panels basically. The 170m offered by various governments pays for the tooling.

The car coming down the line will be brought by fleets and govt departments. So considering your R&D has already been paid for, any local sales to private buyers will be profit.

Postcript: We're making a hatch.... what's the bet the hatch will be Astra panels and exported to the rest of the GM empire, leaving Daewoo to make the sedan?

[DougM]

Originally Posted by vztrt

That Holden trying to off load them to the US Police Force?

Aren't there something like 15-20,000 unsold G8's floating around?? These would be the ones used by the police wouldn't they??

[vztrt]

Originally Posted by DougM

Aren't there something like 15-20,000 unsold G8's floating around?? These would be the ones used by the police wouldn't they??

The cars need changes to be accepted by the police force.
Holden submitted a car to see if they will take it.

[imugli]

From Daniel Howes at Detroit News

GM's Chapter 11 is inevitable

The voice on the other end of the line put it simply: Don't expect anything before June 1.

But the executive's tone spoke clarity and inevitability. There's not much "probable" about it anymore, folks -- General Motors Corp., barring some unforeseen miracle, will declare bankruptcy, altering forever the foundation of the Detroit and global auto industries.

To those routinely issuing predictions of the impending collapse even as they offer prescriptions they don't have to execute, this corporate reckoning was preordained long ago. And it was accelerated by a tanking national economy and the weary frustrations of Bailout Nation and its leaders.

To those families and communities who will be forced to live with the consequences, whatever their bit roll in the causes, these are the days they probably thought they'd never see -- and prayed they never would. But they will, as will their political leaders -- governors, senators and congressmen -- who failed to avert this outcome because their power is almost as spent as Detroit's financial options.

Advertisement


The walk to a federal bankruptcy filing is set, coming as surely as the lines of damaging thunderstorms that pummel Metro Detroit every summer. Chrysler LLC filed first, a test-case for the Obama White House's effort to rescue two-thirds of Detroit's automakers by pushing them to the brink and through a New York bankruptcy court.

Last Friday, GM outlined a strategy to cut 1,100 dealers nationwide -- a plan the automaker intends to complete in or outside of bankruptcy, GM's top North American sales and marketing executive said. Mark LaNeve wouldn't say, but the implication was clear: GM is headed for bankruptcy, lest current and future investors have any doubt, and this is what the automaker will do.

Tuesday, it looked as if the feds would seize control of GMAC. And the president unveiled stiff new federal fuel economy rules, a victory for coastal politicians, the environmental lobby and, in a twisted sense, automakers craving stability and predictability in draconian government regulations.

Wednesday, GM CEO Fritz Henderson and United Auto Workers President Ron Gettelfinger conducted their third straight day of high-level talks on a pre-bankruptcy deal that would cut GM's labor costs and detail its financial obligations to a union-run trust fund for retiree health care.

The goal: Deliver a package in advance of next Tuesday's deadline for GM's bondholders to accept a debt-to-equity swap, unlikely to reach the government-required take rate of 90 percent. Which means the real deadline is sometime next week, before the president's expressed deadline of June 1.

Today, the House Judiciary Committee, chaired by Detroit Rep. John Conyers, is scheduled to hold hearings on the implications of auto bankruptcies -- namely, the impact of widespread job cuts and plants closings jointly engineered and executed by GM, Chrysler and Obama's auto task force.

The walk continues into next week, fresh off Memorial Day. Sometime after midnight Tuesday, probably Wednesday morning, we'll learn how many -- or how few-- GM bondholders will accept the automaker's offer to exchange their debt for equity in a new GM. With thousands of unsecured bondholders, many of them ordinary individuals, don't hold your breath.

Thursday, GM intends to issue payments to myriad suppliers, a precursor to a likely bankruptcy. Why? Because suppliers with outstanding bills would see their payments frozen by bankruptcy, increasing the risk they would stop shipments to GM and force a shutdown.

Remember, folks: The operating assumption of Team Obama, GM, Chrysler and its would-be partner, Fiat SpA of Italy, is that the insolvent U.S. automakers would be split into "good" and "bad" parts in bankruptcy, with the good pieces emerging from bankruptcy relatively quickly and in operating order.

And every deal the automaker does not have when it files Chapter 11 increases the time the surviving entity remains mired in court, imperiling jobs and its survival. Worse, players like the UAW risk seeing their contracts and obligations to their members reworked in bankruptcy if they don't reach a deal before any filing.

Because it will come. Nearly a month ago, Chrysler reached its presidential deadline armed with requisite deals that were designed to facilitate bankruptcy, not avoid it. GM clearly is doing the same, which is no cause for joy or Schadenfreude.

It's reckoning with reality.

[Wally]

I think they thrashed out an agreement with unions yesterday. I doubt it will come as any surprise they will use the safe harbour provisions as a revolving door, it's been mooted for a long long time now.

[Road_Warrior]

Originally Posted by vztrt

Holden submitted a car to see if they will take it.

I don't even think that was by Holden itself, I think that was some 2nd party contractor.

[vztrt]

Originally Posted by Wally

GMAC are now the preferred finance for Chrysler, per the US Taskforce requirements and the extra $6bn they are about to get.

GM have invested another $1bn in GMAC

http://news.theage.com.au/breaking-n...0522-bhjk.html

US Treasury injects 7.5 bln dlrs more into GMAC
May 22, 2009 - 9:14AM

The US Treasury said Thursday it had injected an additional 7.5 billion US dollars into cash-strapped US auto finance giant GMAC to enable it continue providing loans to dealers and consumers.

The Treasury also said it could hold a 35.4 percent stake in the company, the former financial arm of ailing auto giant General Motors.

The new investment, on top of an earlier five billion dollar injection, will support GMAC?s ability to originate new loans to dealers and consumers of another ailing leading auto firm, Chrysler, and help address GMAC?s capital needs, the Treasury said in a statement.

"This new arrangement with GMAC will help provide a reliable source of financing to both auto dealers and customers seeking to buy cars," said Treasury Secretary Tim Geithner.

He said the recapitalized GMAC would offer strong credit opportunities, help stabilize the auto financing market and help in the recovery of the recession-hit economy.

[vztrt]

Originally Posted by Wally

I think they thrashed out an agreement with unions yesterday. I doubt it will come as any surprise they will use the safe harbour provisions as a revolving door, it's been mooted for a long long time now.

http://news.theage.com.au/breaking-n...0522-bhgp.html

US auto workers reach deal with GM, govt
Tom Krisher
May 22, 2009 - 7:39AM

The United Auto Workers union has agreed on a tentative deal with the US government and General Motors Corporation that would cut labour costs and change the way a union-run trust for retiree health care is funded.

The union announced the deal in a short statement issued on Thursday that gave no details, which were withheld pending meetings with members to explain the terms.

The move is a key step toward GM's efforts to restructure outside of bankruptcy court. The company, which has received $US15.4 billion ($A20 billion) in federal loans, faces a June 1 government-imposed deadline to restructure or be forced into bankruptcy protection.

A big hurdle remains. GM needs bondholders who hold $US27 billion ($A35 billion) in unsecured debt to forgive what they're owed for an equity stake in the company. Analysts have said it is nearly impossible that the required 90 per cent of bondholders will agree to the offer.

Union members still have to vote on their deal, according to the UAW's statement. It makes no mention of factory closures or production of vehicles outside the US, items that the union has protested in Detroit and Washington as the deadline approaches.

GM plans to close 16 more factories, costing 21,000 hourly workers their jobs, as it tries to cut labour costs and shrink its manufacturing footprint to match lower demand for its products. Of the 16, two have been announced previously, an engine plant in Massena, New York, and a stamping plant in suburban Grand Rapids, Michigan.

The Treasury Department, which has been overseeing GM's restructuring efforts, had no immediate comment. A message was left for a GM spokeswoman.

GM has about 61,000 hourly workers in the US but plans to take that number down to 40,000 by 2010.

The Treasury's auto task force had pushed for the union to take GM stock in exchange for 50 per cent of the $US20 billion ($A25.85 billion) the company must pay into the trust, called a voluntary employees beneficiary association.

UAW officials have said the union's agreement with Chrysler reached last month will serve as a template for any deal with GM, but some differences had to be worked out.

At Chrysler, the UAW agreed to take 55 per cent of the company's stock in exchange for roughly $US6 billion ($A7.75 billion) of the $US10.6 billion ($A13.7 billion) that Chrysler owes the retiree health care trust.

GM has said it is negotiating to give the UAW about 39 per cent of its stock in exchange for roughly half the $US20 billion it owes to the trust. Half the stock would go to the government, with 10 per cent going to bondholders in exchange for wiping out $US27 billion ($A35 billion) in GM debt. The remaining 1 per cent would go to current shareholders.

Bondholders have resisted the 10 per cent offer, saying they're getting too little for the amount of money they are owed. The offer expires on Tuesday May 26 but could be extended.

A spokesman for a committee of GM's bondholders had no immediate comment on the union agreement.

If its bond exchange offer goes through, GM plans to issue 62 billion new shares and then do a 1-for-100 reverse stock split. The whole deal would severely cut the value of GM's existing shares.

Also under the Chrysler deal, workers will no longer get most of their pay if they are laid off and placed in the controversial "jobs bank". Instead, they will get 65 to 70 per cent of their base pay to supplement state unemployment benefits. The length of time they are paid varies by seniority, but workers with 20 or more years get supplemental pay for a year, then they get 50 per cent for another 52 weeks.

Cost-of-living pay raises also were suspended through 2011, and a provision was added for binding arbitration on a new contract through 2015.

The union also agreed to consolidate non-skilled labour job classifications into a team concept at all factories. Performance and Christmas bonuses will be suspended this year and next to help pay health care costs.

Ford Motor Co., which is not receiving government support, agreed in February to a revised contract with fewer concessions than the Chrysler deal. But the company has said it does not want to be at a disadvantage to its Detroit competitors, so it may eventually reopen negotiations with the union.

GM shares rose 16 cents or 10.9 per cent, to $US1.61 in afternoon trading.

[XplosiveR6]

I really dont get this 'Chapter 11' rubbish,
So any company which cant pay its creditors, can file for chapter 11 in the US and be protected, so does not have to pay its bills while the court proceedings are taking place (which can take years mind you) So how can these creditors afford to survive years without debt repayments??
So by GM and Crysler both filing 'chaper 11' they can potentially send all thier creditors into bankrupsy too, causing a dominos effect. How rediculous!
And all while this is going on GM and Crysler can continue their daily business, potentially undercutting the opposition by Hugly discouting their cars (because they have no debts to pay at the moment). Which effects their opposition, putting them in pressure as well!

Any other country in the world and GM and Crysler would have been finished, it may sound bad, but at least it doesnt effect other innocent companys.

[Mark s]

From what I understand a company can go into chapter 11 which allows it to re-negotiate with it's creditors on its debts and repayments. The creditors may allow a certain amount of debt to be dissolved, in place of owning a portion of the company. Say GM may lose a ¼ of debt from it’s creditors on place of was 25% ownership in the company, post chapter 11.

If both parties agree then it has to be rubber stamped by the judge before it is allowed to proceed.

The people who will lose out will be the Mum and Dad shareholders, who will lose pretty much of their investments. Why do you think the big guns in GM are dumping shares?

[SSbaby]

Originally Posted by XplosiveR6

And all while this is going on GM and Crysler can continue their daily business, potentially undercutting the opposition by Hugly discouting their cars (because they have no debts to pay at the moment). Which effects their opposition, putting them in pressure as well!

Not quite. GM and Chrysler will both stop producing cars until the judge rubber stamps the paperwork.

In GM's case, Ch11 proceedings will take far longer than they would for Chrysler. However, there is no guarantee that either company will come out of Ch11, fully operational. That's why the case is heard before the court.

Generally, the longer the case drags on, the less likely the company will emerge from Ch11.

[Luke Plaizier]

(Repost)


Lukeyson

[kezzer]

GM needs to enter bankruptcy, to get the unions off their back, restructure and move most of the production to the southern "less unionised" states.

The Government would never let them dissolve.

[vztrt]

Go Auto Article

http://www.goauto.com.au/mellor/mell...2575BE00293470

GM bankruptcy ‘within days’

Chapter 11 looms next week as Washington raises offer to GM

By RON HAMMERTON 22 May 2009

THE US government is preparing to send General Motors into bankruptcy as early as next week under a plan that would give the automaker tens of billions of dollars more in public financing, according to the Washinton Post.

Quoting sources familiar with discussions between the Obama administration and GM, the Post says GM would get “just short of $30 billion” ($A38.4 billion) in additional extra loans as it battles to survive.

A cash injection that large would boost the US government's investment in GM to nearly $45 billion ($A57.6 billion), the article said.

And that figure is just the starting point in negotiations between the government and the company, the source is reported to have told the Post.

GM executives in the US have indicated that Chapter 11 bankruptcy is now likely by June 1 – a sentiment echoed by GM Holden chairman and managing director Mark Reuss when talking with journalists at the Holden Cruze launch this week.

The US government has said it plans to take at least 50 per cent of the restructured company and will likely assume the right to name GM directors, the Post said.

Meanwhile, the United Auto Workers union says it has reached a tentative new contract with GM and the US treasury aimed at helping the automaker restructure.

The terms include reworking $20 billion ($A25 billion) in debt owed to a UAW-administered retiree health care trust known as a Voluntary Employees' Beneficiary Association, or VEBA, the union said in a statement today.

In Europe, Fiat has formally announced its bid for GM Europe’s Opel and Vauxhall, joining what is believed to be three-way battle.

Parts manufacturer and vehicle assembler Magna International and Belgium investment firm RHJ International are believed to be other interested parties discussing a takeover of GM’s European operations.

Fiat CEO traveled to Germany earlier this week to discuss the Fiat bid with the German government which is likely to have a strong sale in the new ownership of GM Europe, as government aid is almost certainly going to be demanded.

The German government had asked for all bidders to submit their proposals to Berlin by Wednesday.

[imugli]

IIRC If Washington give the loans under chapter 11, they become preferred creditors, whereas if they loan the money outside Ch. 11 they rank with everyone else. Which makes this a play by the government to have a bit each way, really. Kiss goodbye to the original loans in return for x % of the company, whilst then making further loans granted in chapter 11 either payable or worth more of a stake...

[vztrt]

Its getting closer.

http://news.theage.com.au/breaking-n...0524-bjeh.html

GM, Chrysler face decisive week as deadlines loom
Rob Lever
May 24, 2009 - 7:39PM

The US auto industry faces a tumultuous week that could see sector leader General Motors forced into bankruptcy and number three maker Chrysler move toward a quick exit from court protection.

A consensus is growing that GM -- which faces a June 1 deadline from the US government to come up with a viability plan or face an aid cutoff -- will seek bankruptcy court protection even as it scrambles to win last-minute concessions.

GM reached a tentative deal with the United Auto Workers union on cost-saving concessions that still must be ratified by rank-and-file workers.

It also has set a deadline Tuesday for holders of some 27 billion US dollars in GM debt to make concessions as part of a plan to emerge leaner in the face of depressed auto sales and a weak economy.

Douglas Bernstein, a Michigan lawyer who represents auto suppliers in the Chrysler case, said bondholders face intense pressure to make concessions after the Chrysler case, which forced hefty writedowns on lenders.

"If you are a GM bondholder, you have to understand the real risk is you can end up with nothing or next to nothing," he said.

GM's financial woes dwarf that at Chrysler, which had fewer than 100 main financial creditors. At GM, any debt-for-equity exchange must involve more than 120 major financial institutions, ranging from banks to pension funds, and about 100,000 individual investors.

GM, which is funding its operations with more than 15 billion US dollars in emergency government loans, has said it would work to restructure either in or out of court with the same goals.

In late March, President Barack Obama gave GM 60 days to come up with a "more aggressive" cost-cutting plan to keep government funding and avert bankruptcy.

But legal experts say that even if GM wins cost savings, it may seek bankruptcy protection to stave off lawsuits from dealers that would be shut down.

GM wants shrink its dealer network 40 percent, cutting some 2,300 sales outlets by the end of 2010.

"They have to file because they can't deal with the dealer network outside bankruptcy," said one bankruptcy attorney familiar with the Chrysler case and the auto industry, who spoke on condition of anonymity.

"There's no way GM can resolve its dealer network outside bankruptcy. They would have to find a big bag of money to pay off the dealers and no investors would want to do this."

Chrysler meanwhile awaits a critical bankruptcy court ruling Wednesday that could give the struggling automaker a fresh start in partnership with Fiat, but it still faces a long and difficult road.

Judge Arthur Gonzalez was expected to rule on Chrysler's plan to sell its main assets to a new entity including Fiat, which could allow the "quick rinse" reorganisation sought by the Obama administration.

The ruling could allow Chrysler to emerge quickly following its bankruptcy filing as a new firm led by Fiat but majority owned by the United Auto Workers (UAW) union, with small stakes held by the US and Canadian governments.

Bruce Belzowski of the University of Michigan Transportation Research Institute said the Chrysler-Fiat venture faces a number of challenges.

If Chrysler can wipe out a large portion of its debt and start fresh with the Italian automaker, "it just puts them back in the game and the game is a very tough one," Belzowski said.

"Even before the recession it was extremely difficult for the US manufacturers."

Others say it is possible for the automakers to turn around after wiping out debts and other costs.

"I see the economy bottoming out sometime in the second half of the year, and this would bring some modest upward trajectory in car sales later this year," said Dana Johnson, chief economist at Comerica Bank.

"So we have a strong likelihood of an economic recovery that will push car sales to a level that will allow these companies to do a lot better."

David Cole, chairman of the Michigan-based Center for Automotive Research, said the Detroit firms would do better after making painful cuts to bring down capacity and squeeze out legacy costs.

Cole said the automakers have managed to slash costs to get to a break-even point with a market of some 10 million new vehicles annually, down from recent levels of 15 to 16 million.

As a result, he said, with an uptick in sales to 13 or 14 million, "this is going to become a very profitable industry."

[Dave_au]

The most amazing thing mentioned in the above articles (and in particular Chrysler's case) is that the focus just seems on minimising the impact of the current outstanding liabilities or taking the scalpel to the dealer networks; there doesnt seem to be the proper split up of the cash generating and cost generating business lines as much as I would have expected.

These seems to be little notion of a fundamental change in business or business approach; the Chrysler-Fiat merger/fiat takeover will probably last for about 4 years until FIAT realises it was never going to work in the first place, or that the whole change management between US and European business cultures was a complete failure, and then Chrysler will be back in the same mess that it's in now.

[vztrt]

GM gets another 4 bil.

http://www.goauto.com.au/mellor/mell...2575C00080FD6B

GM gets another $US4 billion

More government aid for GM as bankruptcy looms

By IAN PORTER 25 May 2009

GENERAL Motors has put two more pieces of its survival puzzle in place by winning another loan from the US government and cost concessions from the Canadian Auto Workers union.

But the stumbling giant still appears headed for bankruptcy because the holders of $US27 billion in unsecured loans are unwilling to trade that for a handful of shares of questionable value representing 10 per cent of the reconstructed capital.

The latest loan for $US4 billion ($A5.14 billion) brings the total advanced by the US treasury to $US19.4 billion ($A24.8 billion), although GM expects the total to rise to $US27 billion ($A34.5 billion) if it gets government approval for its revised restructuring plan by June 1.

The concessions from the CAW matches those agreed with the US United Auto Workers union: lower wages costs and payment, or part payment, by new shares for the new union-administered retiree health insurance plans.

The US government insisted that all stakeholders make a contribution to GM’s recovery. The last remaining obstacle appears to be the holders of GM’s $US27 billion in unsecured bonds.

While the government has stipulated that GM should issue new shares at a rate of 225 for every $1000 owed to the retiree health fund and bondholders, the bondholders will only be allowed to hold 10 per cent of the restructured capital.

The enormous number of shares to be issued would reduce the current shareholders to about one per cent, but the government has decided the union-administered Voluntary Employee Benefit Association (VEBA) should own 40 per cent after swapping about half the $US20 billion GM was to have paid into the fund.

The US government would hold a 49 per cent stake after swapping half the near-$US20 billion it is owed.

By contrast, the bondholders would get only 10 per cent of GM in return for swapping $US24 billion of the $US27 billion they are owed.

They are fighting the government’s plan, claiming that they should end up with at least 58 per cent of the restructured GM.

“It's been a universal no from the get-go," said Nevin Reilly, a spokesman for the committee representing the bondholders.

“Bondholders are being seen as speculative bad guys, but bondholders are investors, many of whom put their retirement money into GM."

Obama administration's auto task force member Austan Goolsbee told Reuters that the bondholders were “going to have to take some haircut”.

"Everybody has got to put some skin in the game," he said.

The Obama administration is preparing to steer General Motors into bankruptcy next week, the Washington Post reported late Thursday, citing sources familiar with the discussions.

However, Reuters reported a source saying a GM filing was not certain and reports that GM will seek court protection as early as next week were premature.

[Nikked]

What's the point of loaning them money, file for bankruptcy, restructure...

[shakows]

But they will still need money to make it through bankruptcy

Probably even more, as less people will buy there cars while it happens

[4Vman]

I get the feeling the US govt wont let them fall over regardless of how big a basket case they are.. they'll keep propping them up at the 11th hr with money.