Automotive News, Media & Press - Gm bankruptcy plan: Quickie sale to gov't

CORRECTED - UPDATE 1-GM bankruptcy plan eyes quick sale to gov't
Tue May 19, 2009 2:02pm EDT

(Removes third paragraph with reference to not making any other payment)

By Chelsea Emery and Tom Hals

NEW YORK, May 19 (Reuters) - General Motors Corp's (GM.N) 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 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)


Reuters

Disappointing, but maybe, God willing, some semblance of the GM we know and love will remain...

sweeeeet

the government gets deeper into private business at the expense of the taxpayers.

i love this administration

goodbye LS series motors :( i might be exaggerating but still, itll be a dark day if and when this comes to pass.

I don't think you are exaggerating at all. The new mpg and CO2 standards will be the way they mandate the end of power, performance, and any semblance of fun. Get ready for worthless 1 1/2 seat econocrap cars like the so-called "Smart" car. The government now has greater power in the auto industry than they ever had. Where oh where have you ever seen government give up power except by force?

I don't think you are exaggerating at all. The new mpg and CO2 standards will be the way they mandate the end of power, performance, and any semblance of fun. Get ready for worthless 1 1/2 seat econocrap cars like the so-called "Smart" car. The government now has greater power in the auto industry than they ever had. Where oh where have you ever seen government give up power except by force?

That just means will will have to buy foreign cars if we want something fun. The governement can push them to build whatever they want, but you don't have to buy it. Brand loyalty will always be outweighed to personal loyalty. I won't buy a toaster on wheels just becuase it is made by compnay "x".

The fun cars are not going away, they will just carry a gas guzzler tax.

just pray that Ford is able to persevere.... (I never thought I'd be saying that, but as long as they don't take gov't funds I will give my support to them)

just pray that Ford is able to persevere.... (I never thought I'd be saying that, but as long as they don't take gov't funds I will give my support to them)

+1
I can already see the government canceling out the corvette, camaro, etc. Because they don't meet their future plans of high mileage vehicles.
-Joel

I'm glad to see that we won't be loosing GM completely, but really that's only to support the existing vehicles. At this point, I pretty much assume that when I replace my WS6 with a C6Z towards the end of this year, it will be the last NEW GM vehicle I will ever purchase. I just don't see them producing any new vehicles that i'll be remotely interested in after this takeover.

Furthermore, Ford is going to meet the same fate. They may make out better since the government will hopefully have this process ironed out after going through Chrysler, then GM...etc. But at this point Ford is heading full steam in the same direction, they just have the ability to postpone it because of the massive credit line they had established.

All we are going to have left for performance is used vehicles and the prospect of heavily modifying the econo-junk that automakers will be putting out after this is all over. Fortunately, for what we have left of the new golden age, the automakers are producing some AWESOME cars that we will be drooling over buying and restoring with our future sons.

Make no mistake, we are now very close to the end of the modern horsepower wars.

I'm glad to see that we won't be loosing GM completely, but really that's only to support the existing vehicles. At this point, I pretty much assume that when I replace my WS6 with a C6Z towards the end of this year, it will be the last NEW GM vehicle I will ever purchase. I just don't see them producing any new vehicles that i'll be remotely interested in after this takeover.

Furthermore, Ford is going to meet the same fate. They may make out better since the government will hopefully have this process ironed out after going through Chrysler, then GM...etc. But at this point Ford is heading full steam in the same direction, they just have the ability to postpone it because of the massive credit line they had established.

All we are going to have left for performance is used vehicles and the prospect of heavily modifying the econo-junk that automakers will be putting out after this is all over. Fortunately, for what we have left of the new golden age, the automakers are producing some AWESOME cars that we will be drooling over buying and restoring with our future sons.

Make no mistake, we are now very close to the end of the modern horsepower wars.

That's not all we're near the end of.

This is just the tip of the iceberg... government once again sticking its nose into business it does not belong. This needs to change... fast or we are going into a hole that you can't climb out of.

X1000. The real reason the government is attacking autos in general is because they are a symbol of freedom that many politicians hate. :gtfo: and leave us alone!

X1000. The real reason the government is attacking autos in general is because they are a symbol of freedom that many politicians hate. :gtfo: and leave us alone!

I can't tell if this is a joke or not...

This is just the tip of the iceberg... government once again sticking its nose into business it does not belong. This needs to change... fast or we are going into a hole that you can't climb out of.

I firmly believe we are already waist-deep in said hole...

I can't tell if this is a joke or not...
I don't think it was, and that's pretty sad. :lol:

+1
I can already see the government canceling out the corvette, camaro, etc. Because they don't meet their future plans of high mileage vehicles.
-Joel

Like others have said hopefully ford is able to keep making "pony cars" in the future. Below is a quote from Fortune at CNN's web site. From the sounds of the article GM may be dropping additional high-horsepower models.

Take it easy
Brewski

"New government fuel economy regulations also face GM as it emerges from bankruptcy -- 39 miles per gallon for cars and 30 mpg for trucks by 2016. GM likes to brag about all the cars it makes that get 30 miles per gallon but it is still a long way from 39 mpg. It has already announced it is discontinuing its five high-performance models. Expect other high-horsepower models like Camaro to vanish as well.

Anyone for a four-cylinder Corvette?"

http://money.cnn.com/2009/05/27/autos/gm.bankruptcy.fortune/index.htm?postversion=2009052717

I don't expect this company to survive without continuous taxpayer funding. The government will demand GM build what it wants not what consumers want and at a higher cost.

Blame 1 person for the whole mess. Angelo Mozilo..Know who he is???

All I can say... is when they start building crap cars and lame mini-trucks.... my bussiness will be going elsewhere. :(

Blame 1 person for the whole mess. Angelo Mozilo..Know who he is???

I think your putting too much blame on one person...

try this list.... http://www.time.com/time/specials/packages/completelist/0,29569,1877351,00.html

I agree the govt. should NEVER get involved with private businesses. Obama fired the CEO of GM for god sake. Gee, we live in a dictatorship now. I HATE our govt.

I wish Ron Paul made it into office instead of the same old shits that usually do. We are a joke worldwide!

-Mike