They can Still Call it GM

chefdennis · May 19, 2009

But it is all but offical that it will be GOVERNMENT MOTORS!

And barry said he didn't want to own the car companies.....he will soon own 2 of them.....

this is not good for businesses and investors in general...

GM bankruptcy plan eyes quick sale to government

Tue May 19, 2009 2:17pm EDT
By Chelsea Emery and Tom Hals
GM bankruptcy plan eyes quick sale to government | U.S. | Reuters

Highlights:

(Reuters) - General Motors Corp's bankruptcy plan includes the sale of healthy assets to a new company, owned by U.S. government, a source said on Tuesday.

* Bankruptcy plan includes proposal for labor, old unsecured creditors to get stock in new company: source

* Secured creditors claims will transfer to new company-source

* Plan calls for U.S. to extend credit line to new company; Treasury to forgive bulk of $15.4 billion of loans

* Plan calls for Fritz Henderson to be CEO of the new GM: source

* The board of the new company would be established with the tacit approval of the government
© Thomson Reuters 2009

NEW YORK (Reuters) - General Motors Corp's plan for a bankruptcy filing involves a quick sale of the company's healthy assets to a new company initially owned by the U.S. government, a source familiar with the situation said on Tuesday.

The source, who would not be named because he was not cleared to speak with the media, did not specify a purchase price. The new company is expected to honor the claims of secured lenders, possibly in full, according to the source.

The U.S. government would honor the claims of secured lenders -- possibly in full, according to the source -- and would not make any other payment to acquire the healthy GM assets.

The remaining assets of GM would stay in bankruptcy protection to satisfy other outstanding claims.

GM has about $6 billion in secured debt, including a secured revolving credit and bank debt.

The government's plans include giving stakes in the new company to GM's union and bondholders, although the ownership structure of the company is still being negotiated, said the source who is familiar with the company's plans.

In addition, the government would extend a credit line to the new company and forgive the bulk of the $15.4 billion in emergency loans that the U.S. has already provided to GM, the source said.

The government has given GM until June 1 to restructure its operations to lower its debt burden and employee costs.

If those talks failed, the company has said it would follow rival Chrysler LLC into bankruptcy.

Setting up a new company to buy the healthy assets is aimed at reassuring consumers who might not be willing to make a major purchase from a bankrupt company, fearing it would not honor warranties or provide service.

The board of the new company would be established with the tacit approval of the government. Fritz Henderson, who took the helm of GM earlier this year after the government pushed out Rick Wagoner, would likely head the new company, the source said.

GM could not be immediately reached for comment.

GM shares were up about 9 percent at $1.29.

(Editing by Gerald E. McCormick)

greg334 · May 19, 2009

This is screwing a lot of people, it is like KMart. I refuse to shop at KMart because of what happened there, and I will not buy a GM product made from this point on, they have lost my confidence.

The thing is the Buy American cr*p is starting to roll again and I can't jump on board with GM or Chrysler - all their products that are owned by my family are not made in this country;

Caravan - Canada
Ram truck - Mexico
PT Cruiser - Mexico
Ponitiac of my sister's - Mexico
Caravan of my sisters - Canada
HHR of my other sister - Mexico
And so on - all foreign made.

The other problem is an assumption that is being made - that GM and Chrysler will come back because of the consumer will want to buy their products - a bad assumption. There seems to be this thought that it will all change because GM and Chrysler will come out of bankruptcy to be a better company but with the same products being sold, what is going to change the minds of the consumer?

The dealers are closing, a lot of people are upset with that alone. While this sounds like it is a move to save money for GM and Chrylser, the dealers are stuck with an inventory that they paid for and can't give back. Today there was a brief comment made by one of the think tanks in Ann Arbor which they pointed out that the casting out of the a larger number of dealers than really required is going to hurt GM and Chrysler in the fall because that will be the time that the dealers will liquidate their car inventory to recoup some of the cost which means deep discounts and with an outstanding 80,000 car inventory of these cast out dealers, it will put a dent in car sales.

Steady Eddie · May 20, 2009

Check any "American Made" car/truck's vin number. If it starts with a #2 it's made in Canada. If it starts with #3 it's made in Mexico..... The Dodge SRT10 Ram, you know the truck with the Viper engine...made in Mexico.

So GM has a new CEObama? ha.....taste like what?

Steady Eddie · May 20, 2009

greg334 said:
The dealers are closing, a lot of people are upset with that alone. While this sounds like it is a move to save money for GM and Chrylser, the dealers are stuck with an inventory that they paid for and can't give back. Today there was a brief comment made by one of the think tanks in Ann Arbor which they pointed out that the casting out of the a larger number of dealers than really required is going to hurt GM and Chrysler in the fall because that will be the time that the dealers will liquidate their car inventory to recoup some of the cost which means deep discounts and with an outstanding 80,000 car inventory of these cast out dealers, it will put a dent in car sales.

Closing the dealerships is the dumbest thing. The Auto makers make a profit off them, get this, even if they do not sale a car...The dealerships pay them fees, along with monhly payments for inventory. Why close any 13,000 +dealership that has to sale 150 million auto's? Set to close another 3600 dealerships....

layoutshooter · May 20, 2009

It has been the plan of the "Left" to destroy the auto companies for years. Destroy our industry and you destroy our military. The 1938 plan that Russia put into place is just about complete. Way to go Obama!!! I bet that all you UAW guys STILL think the "Left" is on your side too.

duramaxvan · May 20, 2009

I worked 25 years in a GM plant, bought several new cars and trucks, my 08 van will be my last new GM vehicle!

chefdennis · May 20, 2009

Duramaxvan wrote:

my 08 van will be my last new GM vehicle!

I am thinking alot of people will be making that same decision.

Now with the new regulations that barry has set in motion, I have to wonder what makes government motors think these car companies will ever be profitable?!?! Take a look at the hybrid inventories right now....they can't give them away...unemployment is going to get higher and the cars that they will need to build to get the stated CAFE, no one will want....

Also heard today that the creditors that should be in the 1st position in the BK are being offered 10 cents on the dollar and the rest is going to the FED and the Unions, just like with Chysler....why would anyone want to lend money to any company again!?!? Their s the chance of the FED nationalizing it, the debt holder gets screwed and their investment is gone...so much for contract law.......

layoutshooter · May 20, 2009

When you elect criminals how in the world to you expect them to worry about contract law? When you elect people that hate our country how can you expect them to follow the Constitution?

greg334 · May 20, 2009

The dealers do not get financing from the company, they have a revolving credit through either GMAC, Ford Credit, Chrysler credit or one of the lending institutions.