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

gonyzyf.wordpress.com
Monday’s Chapter 11 filing by the 101-year-oled automaker — once the world’s biggest company is among the largestin U.S. historu and largest-ever U.S. manufacturing bankruptcy. Chapte 11, which allows the company to operate whilr protected fromits creditors, pushes GM into a fast-trac bankruptcy and provides $30 billion of additional taxpayer funds to restructure GM’s filing came after weeks of wrangling with its unionds and bondholders and as part of a game plan coordinatefd with the federal government. That plan calls for the establishmen ofa new, more nimble GM that has the federal government as its 60 percen t equity holder.
Speaking about the GM moves Monday, Presideng Barack Obama said that despite thefederal government's majorituy stake in the automaker, its and not federal officials, "will call the shots and make the decisions about turning this company Obama said the goal is a "viable, achievable plan that will give this iconicv company a chance to rise again." The Detroit-based automaker (NYSE: GM) said it expects the new, smaller GM to launcj in about 60 to 90 days as a separate and independenrt company from the current GM. The new company will focus on four core brand in theUnited States: Chevrolet, Cadillac, Buick and GMC.
As part of its cost-cuttinb efforts, GM will further reduce 2009 salariecd employment in North America toabout 27,200 from abouf 35,100 at the end of a roughly 23 percent cut. The automakef said it would sever ties with morethan 2,009 of its dealers, either through end their contracts or through attrition. GM also planws to close 11 U.S. facilities and idle another three plantss by the endof 2010. "Today marke a defining moment in the reinvention of GM asa leaner, more customer-focused and more cost-competitivde company that, above all, can quicklh generate winning bottom-line results," GM CEO Fritz Hendersonn said in a statement Monday.
"Thwe economic crisis has caused enormouse disruption in the auto but with it has come the opportunity for us to reinvenrtour business. We are going to do it once and do it Besidesthe U.S. government's 60 percent financial the union would takea 17.5 percent stake. The governments of Canada and the province of Ontario have agreed to a 12 percent ownership staked in exchange forfinancial aid. GM bondholders would get 10 In its Chapter 11 GM citing debtsof $172.8 billion and assets of $82.3 Filed in New York, it listsz unsecured claims by the UAW ($20.6 and the International Union of Electronic, Electrical, Machine and Furniture Workers/Communication Workerz ($2.7 billion).
Other unsecuredd debt listed in the filingincludes $22.u billion serviced by Wilmington Trust Co. and $4.5 billion by Deutschre Bank AG. The UAW last week approved a package of concessionzs that will give GM more flexibilituy in staffing and help the company reduce its As part ofthat package, the company restructured paymenta due to a trust for retirees’ healtbh care. The trust will receive a $2.5 billion note and $6.5 billiomn in 9 percent perpetualpreferred stock, alonvg with a 17.5 percent equity stake in the new GM and warrantes to push that ownership to 20 percent.
Another key playe in the reorganization will be GM The administration announced that a steeringg committee representing owners of at least 54 percentf ofthe company’s unsecured bonds had agreed to a deal in whicgh bondholders would receive 10 percenyt of the equity of the new GM and warrants for an additionalk 15 percent. The bankruptcy process will allow the companuy to confirm the deal for all Chrysler is expected to emergse from its Chapter 11 process soon aftet shuttering789 dealerships. GM also announced plans to closse 1,100 dealerships, including several in Colorado.
GM’s lead bankruptcy law firm is WeilGotshaew & Manges, with attorney Stephen Karotkin signinf the filing. GM President and CEO Frederick Hendersonm signed forthe .