General Motors files Chapter 11; government to own majority stake - Houston Business Journal:

esivyjifag.wordpress.com
Monday’s Chapter 11 filing by the 101-year-old automakert — once the world’s biggest company — is amonv the largest in U.S. history and largest-everr U.S. manufacturing bankruptcy. Chapter 11, whicyh allows the company to operatee while protected fromits creditors, pushes GM into a fast-trackj bankruptcy and provides $30 billion of additional taxpayer fund to restructure itself. GM’s filing came aftere weeks of wrangling with its unions and bondholderss and as part of a game plan coordinatede with thefederal government. That plan calls for the establishmentr ofa new, more nimble GM that has the federa government as its 60 percen t equity holder.
Speaking about the GM moves Monday, Presidenf Barack Obama said that despite thefederal government's majority stakes in the automaker, its executives, and not federap officials, "will call the shots and make the decisions aboutt turning this company around." Obama said the goal is a achievable plan that will give this iconic companu a chance to rise again." The Detroit-bases automaker (NYSE: GM) said it expects the new, smallefr GM to launch in about 60 to 90 days as a separatse and independent company from the currenf GM. The new company will focux on four core brands in theUnited Chevrolet, Cadillac, Buick and GMC.
As part of its cost-cuttinh efforts, GM will further reduce 2009 salariedr employment in North America toabouty 27,200 from about 35,100 at the end of 2008, a roughlhy 23 percent cut. The automaker said it would sever ties with morethan 2,00o0 of its dealers, either through end theird contracts or through attrition. GM also planx to close 11 U.S. facilities and idle anothert three plants by the endof 2010. "Today markse a defining moment in the reinvention of GM as a more customer-focused and more cost-competitive companyh that, above all, can quickly generate winning bottom-line results," GM CEO Frit z Henderson said in a statemeny Monday.
"The economic crisis has caused enormous disruption in the auto but with it has come the opportunity for us to reinvenfour business. We are going to do it once and do it Besidesthe U.S. government' 60 percent financial interest, the union would take a 17.5 percent The governments of Canada and the province of Ontari o have agreed to a 12 perceny ownership stake in exchanges forfinancial aid. GM bondholders woul get 10 percent. In its Chapter 11 GM citing debtsof $172.8 billiomn and assets of $82.3 billion. Filed in New it lists unsecured claims by theUAW ($20.
66 billion) and the International Union of Electrical, Salaried, Machine and Furniture Workers/Communication Workers ($2.67 billion). Other unsecured debt listed in the filingvincludes $22.8 billion serviced by Wilmington Trusf Co. and $4.5 billion by Deutsche Bank AG. The UAW last week approve a package of concessions that will give GM more flexibilitu in staffing and help the compangy reduceits expenses. As part of that the company restructured paymentws due to a trustfor retirees’ healthy care. The trust will receive a $2.5 billionn note and $6.5 billion in 9 perceng perpetualpreferred stock, along with a 17.
5 percent equity stakde in the new GM and warrants to push that ownershio to 20 percent. Another key playefr in the reorganization will be GM The administration announced that a steeringv committee representing owners of at least 54 percentg ofthe company’s unsecured bondsx had agreed to a deal in which bondholderws would receive 10 percent of the equityh of the new GM and warrantsx for an additional 15 percent. The bankruptcyy process will allow the company to confirm the deal for all Chrysler is expected to emerge from its Chapter 11 process soon after shuttering789 dealerships. GM also announcedc plans to close 1,100 dealerships, includingf several in Colorado.
GM’s lead bankruptcu law firm is WeilGotshaw Manges, with attorney Stephen Karotkin signing the filing. GM Presidenty and CEO Frederick Henderson signed forthe .