**GM preparing for bankruptcy**

[uranium_death]

4V makes a point that I suppose many people would have also thought.
GM is a symbol of US manufacturing, and their products help to form some portion of the US image.
Along with the fact that they employ so many people, to a point, it's understandable that they may not let GM fall.
However, throwing money into the fire is not all that smart.
I am glad to see that Ford is managing a little better.

[4Vman]

Originally Posted by uranium_death

4V makes a point that I suppose many people would have also thought.
GM is a symbol of US manufacturing, and their products help to form some portion of the US image.
Along with the fact that they employ so many people, to a point, it's understandable that they may not let GM fall.
However, throwing money into the fire is not all that smart.
I am glad to see that Ford is managing a little better.

I hope GM survive, but i also hope that there is a huge upside for Ford out of all this too, both in the US and here..., especially considering their house is in much better order than GM's.
I hope Ford pick up significant market share and profitability as a result as a kind of reward for better management and vision... especially if GM survive with the artificial financial shield being provided by the US govt.

**** waits for wally's retort ******

[Wally]

No retort 4Vman, you have finally echoed my thoughts made six months ago, good on you. There's no cleverness in predicting the outcome, both GM and Ford are strategic to the US in economic, political, social and military terms, while Chrysler has been a basket case for a generation or more. Both are icons of American might, albeit a bygone era.

Yes Ford should reap the benefits of free market savy, but in my opinion they won't, because a large segment of car purchases are still polarised by blind brand loyalty and bias away from domestic product. Personally I don't see that Ford are in a great position, given they are really an insolvent company with a deficit equity of US$17.3bn and could in all likelyhood end up a Qango like GM if the market doesn't bump soon.... just my dispassionate business opinion, nothing more.

[vztrt]

Originally Posted by 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.

Pretty much GM was never gonna go down (no matter how much big talk the senators made), it's what happens to their subsidiaries that I am more interested.

[Paxton]

Originally Posted by vztrt

Pretty much GM was never gonna go down (no matter how much big talk the senators made), it's what happens to their subsidiaries that I am more interested.

And their suppliers for who I am worried. The suppliers will be lucky to survive, through no fault of their own.

[imugli]

Originally Posted by Nikked

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

The larger the loan to Uncle Sam, the more equity Uncle Sam gets in a restructure and therefore the more control.

He may not want to PUBLICLY control the company, but make no mistake, everything that happens at GM once they come out of Ch 11 will be as a result of a nod and a nudge and a wink from El Presidente.

Know what I mean, eh? Say no more, say no more...

[vztrt]

Deal reached with the Canadian auto workers union.

http://news.theage.com.au/breaking-n...0526-blq3.html

GM reaches cost-cutting deal with Canadian union
May 26, 2009 - 4:14PM

The Canadian Auto Workers union reached agreement with General Motors to reduce labor costs, paving the way for authorities to further fund the ailing US auto giant.

Some 10,000 CAW members "voted overwhelmingly in favor of a new collective agreement, ratifying the deal by 86 percent," the union said in a statement following the tentative agreement reached with GM on Friday.

The cost-cutting move, which involves about a 15- to 16-dollar wage cut per hour, was demanded by Ottawa and the Ontario government as part of a joint bailout of GM, to try to make the company more competitive with Japanese and European automakers.

"Although we were forced to make a number of important sacrifices, the support we received from our members is proof that they recognize the incredible challenges the industry is facing," CAW president Ken Lewenza said.

GM said it "welcomed" the ratification of the new agreement, praising "the shared sacrifices" of employees and the CAW's "leadership and professionalism."

"The ratification of the new agreement is a critical step toward GM Canada's successful restructuring into a stronger, more viable company," the automaker said.

The company has asked for a loan of three billion Canadian US dollars (2.7 billion US dollars US) from the Canadian and Ontario governments, and billions more from Washington, to keep it afloat as it restructures its North American operations.

Ottawa had set a May 15 deadline to reach a deal, but the talks continued until Friday and votes were cast over the weekend.

GM is expected to present Ottawa and Washington with its restructuring plan by June 1.

The agreement, which also includes major benefits, wages and pension concessions but keeps plants open in Ontario province, came days after GM secured a similar cost-cutting deal with its unionized American workers.

Last month, US automaker Chrysler struck an agreement with its Canadian employees to trim compensation by 19 US dollars (16 US per month).

But that agreement did not prevent Chrysler to file for bankruptcy protection. Many analysts predict a similar scenario for GM this week.

© 2009 AFP

[Nikked]

Originally Posted by imugli

The larger the loan to Uncle Sam, the more equity Uncle Sam gets in a restructure and therefore the more control.

He may not want to PUBLICLY control the company, but make no mistake, everything that happens at GM once they come out of Ch 11 will be as a result of a nod and a nudge and a wink from El Presidente.

Know what I mean, eh? Say no more, say no more...

So effectively, the US gov will own a % of the company...

...i wonder how this would effect product line ups.

[imugli]

Originally Posted by Nikked

So effectively, the US gov will own a % of the company...

...i wonder how this would effect product line ups.

That's correct.

Check out an article on Detroit News today.

Under a proposed deal announced earlier this month, the U.S. Treasury and UAW, together, are to own 89 percent of GM's stock, with 10 percent allocated to bondholders who hold $27.2 billion in bonds. Existing shareholders would get the remaining 1 percent.

As for product line-ups, you're already seeing it. GM originally wanted to hang on to Pontiac and I'll stick my neck out and say that GM and Chrysler would have fought to stop the new 2016 CAFE standards if Barack hadn't forced Chrysler to merge with Fiat and he didn't effectively hold 50% of GM in his pocket...

[Wally]

At least the Australians still have a job:

http://www.abc.net.au/news/stories/2...26/2580712.htm

[JPFS1]

Originally Posted by imugli

The larger the loan to Uncle Sam, the more equity Uncle Sam gets in a restructure and therefore the more control.

He may not want to PUBLICLY control the company, but make no mistake, everything that happens at GM once they come out of Ch 11 will be as a result of a nod and a nudge and a wink from El Presidente.

Know what I mean, eh? Say no more, say no more...

They still need $$$ for ongoing operations, so government really have no choice to come to the rescue here. The Bond holders certainly wouldn't feel comfortable swapping for equity, and considering they need what, 90% approval to avoid bankruptcy, then I can't see that happening. The bond holders will be looking to recoup a better proportion of $$$ back via an administration process than to swap for equity in the new restructured company. GM Bankruptcy all but certain.

[ivorya]

I read today on News.com.au that GM will be filing on Friday.

I just can't find the article at the moment but i will keep trying..

[R-Design]

Originally Posted by ivorya

I read today on News.com.au that GM will be filing on Friday.

I just can't find the article at the moment but i will keep trying..

Is this the one?

http://carsguide.news.com.au/site/ne...y_end_of_week/

[Paxton]

They've got till June 1, so it isn't exactly unexpected for them to try and wait it out until the last day. It is inevitable that GM will file, it just takes someone with some guts to pull the trigger.

Chrysler have done the deed, it is just GM left.

[vztrt]

Looks more likely to happen now.

http://news.theage.com.au/breaking-n...0527-bnr6.html

GM's debt-for-equity deal falls through
May 27, 2009 - 10:09PM

Struggling US automaker General Motors looked closer to bankruptcy Wednesday after it said a debt-for-equity swap offer to bondholders had fallen through.

When exchange offers expired late Tuesday "the principal amount of notes tendered was substantially less than the amount required by GM," the automaker said in a statement.

GM had sought to exchange 27.2 billion US dollars of its unsecured public notes to satisfy debt reduction requirements under its loan agreements with the US Treasury and as called for in the company's own "viability" plan.

"Since these conditions, as well as certain other conditions, have not been satisfied, the exchange offers will not be consummated," GM said.

GM was widely expected to file for bankruptcy protection ahead of a June 1 deadline imposed by the administration of President Barack Obama, which has providing the automaker with billions of US dollars in emergency loans.

© 2009 AFP

[Joe5619]

Here something I don’t understand. The bondholder won’t swap debit for equity to the value of about 10% of what there debit is. They have no to this, yet if GM file chapter 11, does this not mean they get 0% for the debit? Surely 10% is better than 0%??

[SB076]

Originally Posted by Joe5619

Here something I don’t understand. The bondholder won’t swap debit for equity to the value of about 10% of what there debit is. They have no to this, yet if GM file chapter 11, does this not mean they get 0% for the debit? Surely 10% is better than 0%??

I would suggest the bond holders would be concerned with the long term viablity of GM and may beleive that 10% of GM will be worth nothing anyway.

[R-Design]

GM = Government Motors. I wonder if they'll adopt VW's "People's Car' slogan?

http://www.abc.net.au/news/stories/2...ction=business

[Wally]

Originally Posted by Joe5619

Here something I don’t understand. The bondholder won’t swap debit for equity to the value of about 10% of what there debit is. They have no to this, yet if GM file chapter 11, does this not mean they get 0% for the debit? Surely 10% is better than 0%??

You may find there are taxation benefits to a creditor with a debtor going into bankruptcy (e.g. he can move doubtful debts into bad debts and pick up the tax credits as a result)

[vztrt]

Little bit more on the short story above.

http://business.theage.com.au/busine...0528-bnw2.html

GM hurtles toward bankruptcy as debt swap fails
May 28, 2009 - 6:33AM

General Motors is skidding toward bankruptcy after bondholders rejected a plan to swap a large portion of the troubled automaker's debt for equity in the firm.

GM said it failed to get enough participation in a plan to exchange $US27.2 billion ($35 billion) of its notes, which had been required under GM loan agreements with the US Treasury and the company's own "viability" plan.

GM was widely expected to file for bankruptcy protection ahead of a June 1 deadline imposed by the administration of President Barack Obama, which has provided the automaker with billions of dollars in emergency loans.

The rejection suggests a likely bankruptcy filing that some analysts say could be messier and longer than that of Chrysler, which appeared poised to emerge from court supervision as a new entity allied with Italy's Fiat.

Douglas Bernstein, a Michigan bankruptcy attorney who represents auto suppliers, said GM's fate rests on "the power and the desire of the US Treasury in having the transaction pushed through quickly".

But he argued that even if Chrysler emerges quickly from court, "it's not automatic in the case of GM".

Bernstein said a different judge may consider other matters and GM has numerous stakeholders: "The judge has to weigh all the parties' due process rights."

Moreover, he said there is no outside party willing to take over GM, compared with Chrysler, which would emerge as part of a partnership with Italy's Fiat.

Martin Weiss, president of Weiss Research, said of GM: "It's far larger than Chrysler, far more complex and far more likely to backfire on nearly all concerned."

GM, which was once the world's biggest company, would likely be the largest industrial bankruptcy in US history, presenting challenges.

"It is a completely different ballgame when you are looking at a company as geographically diverse as GM is," said Rebecca Lindland, an auto industry analyst at IHS Global Insight.

"We've never had a company this large declare bankruptcy."

The US government has provided $US19.4 billion ($25 billion) in emergency loans to GM as of now, and could provide additional funds to pave the way for a quick bankruptcy that could allow GM, like Chrysler, to shed debts and legacy costs.

Canada would also likely provide cash, giving the two governments a majority stake, according to a source familiar with GM negotiations.

The source said however that a GM bankruptcy "would be a much more complicated process than for Chrysler" and might not be as fast.

Under the plan for GM, the US Treasury would have a majority stake in GM, which the source said was unavoidable because "the company was in a position where it needed a huge amount of capital."

John Pottow, a bankruptcy specialist at the University of Michigan law school, said he believed GM would successfully come out of bankruptcy.

"I think that with the amount of US government support it is getting, GM is likely to reorganise successfully," Pottow said. "You'll have a smaller company but you'll have a company."

Some reports said the government would pump in another $US30 billion ($38.6 billion) or more to help GM survive, raising questions about whether taxpayers would be repaid.

Pottow said that "if the company reorganises and is valuable, the price will go up and GM will be able to pay that money back. The question is how long it will take."

The United Auto Workers union agreed to a significantly smaller stake in GM in exchange for job protections and other incentives, according to union sources.

The UAW agreed to accept a 17.5 per cent stake rather than the 39 per cent stake proposed in the viability plan GM presented to the US Treasury.

It was not clear where the remaining stake would be allocated, although it could be used to help sweeten a deal offered to bondholders.

AFP

[Jason[98.EL]]

was listening to the radio this morning and couldnt beleive what i was hearing

looks like the local media have jumped on the gm/bankrupcy and doing thier normal doom and gloom

they stated that if GM U.S goes into sect 11 that G.M AU will have to stop trading/manufacturing cars till it is sorted out in the us

i hope that report is wrong as it will have bad reprocutions here for our local manufacturing... not to mention the job losses ect ...

Jason

[Joe5619]

Originally Posted by Jason[98.EL]

they stated that if GM U.S goes into sect 11 that G.M AU will have to stop trading/manufacturing cars till it is sorted out in the us

I dont find that one as a big shock.. I know Chrysler has closed it's manufacturing in the US while Chapter 11 is sorted (they can still sell, just on Manufacturing). I guess GM will have to do the same in the US. The part that is unknown would be, does Holden in Australia have to follow the parent company (legelly) as well???

[Jason[98.EL]]

bugger

i was hoping for the good side being that GM au would not fall under the no manufacturing side of it all but i guess that would almost be a certain thing in reality though

Jason

[4Vman]

Originally Posted by Jason[98.EL]

was listening to the radio this morning and couldnt beleive what i was hearing

looks like the local media have jumped on the gm/bankrupcy and doing thier normal doom and gloom

they stated that if GM U.S goes into sect 11 that G.M AU will have to stop trading/manufacturing cars till it is sorted out in the us

i hope that report is wrong as it will have bad reprocutions here for our local manufacturing... not to mention the job losses ect ...

Jason

Makes a pleasant change from all the Ford bashing here and in the media...
Its not good if suppliers get dragged down with this, that said someone will have to make the cars people buy, the pie wont shrink, only the number of pieces its cut into meaning smart suppliers will pick up the extra production the remaining companies gain.

[Mark s]

Joe

Even though Holden is owned by GM. It would not come under the same rules. After all GMH is based and run in Australia and it would fall under Australian laws.

I am not sure on the stock pile of V8 engines within Australia for Holden and if GM can still ship parts already manufactured? Maybe that could be an issue for Holden if they are unable to source certain parts for a period of time.

As far as I can see 2 things can and will happen for Holden.

1. They remain in the GM empire and continue on.

2. They are sold and bought out from someone else. (not sure what happens with the GM parts if this happens)

The company I work for went into chapter 11, 2 and a bit months ago, and we are still running as per normal as we are seen as a seperate entity to the parent back in the US.


Cheers
Mark

[Joe5619]

Originally Posted by Mark s

Joe

Even though Holden is owned by GM. It would not come under the same rules. After all GMH is based and run in Australia and it would fall under Australian laws.

I agree with that to a degree.. However, I work for a US exchange listed company & whilst we have to comply to Australian Law we also have to comply with US law as our parent company is US own. Things like SOX testing is US law & we in Australia have to comply with this whilst other Australian companies (not US owned) do not...

[Mark s]

Fair enough. I work for a US owned company that is in chapter 11 at the moment. We are still running, as prior to the parent going into chapter 11. I do not wish to name the company I work for either.

[R-Design]

Tony O'Kane's a believer. Reading this you'd think Holden will become the centre of the GM universe shortly.

http://www.themotorreport.com.au/326...s-to-cadillac/

[Chilliman]

Originally Posted by Boss315

Tony O'Kane's a believer. Reading this you'd think Holden will become the centre of the GM universe shortly.

http://www.themotorreport.com.au/326...s-to-cadillac/

"Come June 1 GM will announce its latest viability plan" - is that the latest euphemism for bankruptcy?

[vztrt]

Government will own 72 % of GM

http://news.theage.com.au/breaking-n...0529-bp36.html

GM says US to own 72% under bankruptcy plan
May 29, 2009 - 12:09AM

The US government would own 72.5 percent of General Motors under a proposed bankruptcy reorganisation outlined by the ailing automaker, a regulatory filing showed Thursday.

GM said the US Treasury agreed to the plan to create a new company that buys the assets of the automaker and that bondholders who had rejected an earlier proposal "support the economic terms" of the new plan.

The filing said that the Treasury Department "has indicated to GM that if GM decides to seek relief under the US Bankruptcy Code and seek bankruptcy court approval for the sale of substantially all of its assets ... the US Treasury currently anticipates that a new company sponsored by the US Treasury (New GM) would agree to acquire such assets."

© 2009 AFP