U.S Treasury to Nationalize GM: American Leyland Is Born

[AVANTI R5]

U.S. May Take Stake in GM to Pay Off Loans


Faster Cuts and More Loans Are Key to G.M. Survival Plan



General Motors said on Monday that it needed $11.6 billion more in government loans and that it planned to file for bankruptcy protection if a debt exchange with its bondholders was unsuccessfulG.M. also said that, by 2010, it would phase out its Pontiac brand, eliminate 42 percent of its dealers, close 13 plants and cut 21,000 hourly jobs as part of its revised restructuring plan.

“We need to have a more stable and sustainable business model, because, candidly, we only want to do this once,” G.M.’s chief executive, Fritz Henderson, said at a news conference. “We don’t think that what’s being asked of us is too hard. Our objective here is to create a strategy where we can win, not simply survive.”

G.M. shares rose 25 percent in morning trading on the New York Stock Exchange after the plan was announced.
The cuts outlined on Monday are considerably greater and scheduled to occur sooner than G.M. had outlined in its February restructuring plan. The plan would result in the federal government becoming G.M.’s majority owner.

Since December, G.M. has borrowed $15.4 billion to keep it out of bankruptcy while it tries to restructure. The new request would bring that figure to $27 billion. The company originally said it needed between $22.5 billion and $30 billion to remain solvent.

In the plans announced on Monday, G.M. wants to persuade 2,641 of its 6,246 independently owned dealerships — 500 more than it previously announced — to close four years sooner than it had intended.

By the end of next year, it plans to employ 40,000 hourly workers at 34 plants, down from 61,000 workers at 47 plants. That is at least 7,000 more job cuts and one more plant closure than the February plan called for. An additional 2,000 jobs would be cut in 2011.

G.M. said the additional actions would allow it to break even at industry sales volumes as low as 10 million a year. Sales this year are expected to be slightly higher than that figure.
In addition, the company said it would give bondholders 225 shares, worth $414 as of Friday, for every $1,000 that they hold.

It urged the bondholders, who hold more than $27 billion in G.M. debt, to accept the deal to allow a faster out-of-court restructuring and said their bonds could be worth less or nothing in a bankruptcy filing.

G.M. said the holders of at least 90 percent of its outstanding bonds must agree to the swap by May 26 for the company to avoid bankruptcy.

“We do not intend to seek relief under the U.S. Bankruptcy Code if the exchange offers are consummated,” G.M. said in a regulatory filing.

By exchanging stock for its bonds and by converting its debt to the Treasury Department and to a retiree health care fund for the United Automobile Workers union, G.M. said it can eliminate $44 billion in debt. The Treasury and the U.A.W.
would own up to 89 percent of the company’s outstanding shares, while bondholders would hold no more than 10 percent and current shareholders would hold 1 percent.

The Treasury would own more than half of G.M. on its own and therefore have control over the election of its board and other matters requiring the approval of shareholders.

In a bankruptcy, G.M. said it might separate itself into two companies: a new G.M. composed of desirable assets like the Chevrolet and Cadillac brands, and a collection of its unwanted assets that would then be liquidated.

G.M. has been negotiating with an ad-hoc committee representing large bondholders, but the two sides have been unable to reach a deal. The bondholders committee says G.M. has not been responsive to its requests in more than a month.

The Obama administration’s autos task force gave the automaker until June 1 to develop a more aggressive turnaround plan and to reach deals with its bondholders and the United Automobile Workers union. Talks with the U.A.W., which announced a cost-cutting deal with Chrysler on Sunday, are continuing.

http://online.wsj.com/article/SB123972054506117179.html

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[Yotsuya]

How does Bob Marley fit into it? These appeals to racial stereotypes aren't even making sense anymore...

I mean are they all going to be repaid in legalized pot?

[Mike Wevrick]

Misleading thread title You almost gave me a heart attack. This idea is just insane. Can anyone think of any successful government-owned auto company? Even one?

[Calamity Jesus]

Originally Posted by Yotsuya

How does Bob Marley fit into it? These appeals to racial stereotypes aren't even making sense anymore...

I mean are they all going to be repaid in legalized pot?

Bob Marley = Rastafari
Rastafari = Spiritual marijuana use
Spiritual marijuana use = Trustifarian's excuse
Trustifarian's excuse = Dorm rooms of pothead kids plastered with "Legalize It" posters
Dorm rooms of pothead kids plastered with "Legalize It" posters = "Nationalize It" play on words.

[matt30]

Originally Posted by Mike Wevrick

Misleading thread title You almost gave me a heart attack. This idea is just insane. Can anyone think of any successful government-owned auto company? Even one?

Volkswagon

[Calamity Jesus]

Proton

[su-be3]

Originally Posted by Mike Wevrick

Misleading thread title You almost gave me a heart attack. This idea is just insane. Can anyone think of any successful government-owned auto company? Even one?

Yeah, I can think of one, Lada in Russia, best selling car there for over 40(?) years! Now, whether they still make them or not, I'm not sure! Of course you had to wait, oh 5 years to get one, and then you had to worry about parts being stolen from it after you got it! But hey, it was Russian motoring at it's best.
Now, when the U.S. government gets done with GM and Chrysler, you too will be able to get top notch gas efficent cars that will run on water, air, solar, hydro-electric, and wind and be big enough to hold you, your better half, the dog and one and a half kids in grand style and comfort! Don't wait to be the last on your block to get one! US-C-GM in coming your way!
I'm keeping my Subaru BAJA for as long as I can!
Keep it under 90, folks!

[neg_matnik]

Originally Posted by Mike Wevrick

Misleading thread title You almost gave me a heart attack. This idea is just insane. Can anyone think of any successful government-owned auto company? Even one?

A successful 100% government-owned company? I don't know any.
However, the French government has a stake in Renault. Renault has a stake in Nissan. Both companies are doing OK. Better than GM anyways.

EDIT: I wanted to add some concrete numbers here. The French government's stake went from 53% to 15% over the years.
Take a look here: http://www.renault.com/en/finance/ac...u-capital.aspx
It also looks like Nissan has a 15% stake as well.

[matt30]

But this article is not about government owned auto industries. It's GM looking to it's shareholders for money to pay off debt. And them begging the governemnt for more money.

[JC]

Ya GM is proposing that the Treasury take some stake in the company in order to forgive loans. Not the other way around and definitely not a done deal as the title implies.

[Mike Wevrick]

Proton is not a success; its more of protectionism scheme and pet project for some well connected guy (can't remember his name)

The Treasury would own more than half of G.M. on its own and therefore have control over the election of its board and other matters requiring the approval of shareholders.

Basically this means the Treasury would be running GM. Owning a percentage of shares is one thing, actually running company is something else.

[AVANTI R5]

The New York Times reports (and GM CEO Fritz Henderson’s comments at this morning’s press conference confirm) that the US treasury has plans to “own” GM. If the current bondholder offer goes through, “the Treasury and the UAW would own up to 89 percent of the company’s outstanding shares, while bondholders would hold no more than 10 percent and current shareholders would hold 1 percent. The Treasury would hold more than half of G.M. on its own and therefore have control over the election of its board of directors and other matters requiring the approval of shareholders.” A reporter brought up the fact that bondholders’ $10 billion debt swap would buy them 10 percent of the new GM, while the unions would get 39 percent for their $10 billion haircut. Fritz declined to address this issue—probably because there’s not a damn thing he can do about it. Of course, the offer won’t go through. But the principle will be established. And then, according to The Wall Street Journal, consummated in federal bankruptcy court.

That’s when some $21 billion worth of unpaid US loans to the old, broken ass GM for a majority stake in the new, clean and tidy post-bankruptcy GM. The plan would also translate a large chunk of the automaker’s health care obligations to the United Auto Workers (UAW) into a UAW share in the new “good” GM. When asked by the FInancial Times (shame on the US press contingent) how he feels about a nationalized GM, Henderson deployed the distinction without a difference defense. “The US Treasury doesn’t want to run the company,” Fritz soothed, “they just want to make sure it’s well run.” And girls just wanna have fun. No babies, no lifetime dependents, right?
The Wall Street Journal »

http://www.thetruthaboutcars.com/us-...n/#more-312475

[Ray_STi]

Originally Posted by Beaverboy

Proton

Maruti Suzuki in India
Ashok Leyland in India

[Eyeflyistheeye]

Originally Posted by Mike Wevrick

Misleading thread title You almost gave me a heart attack. This idea is just insane. Can anyone think of any successful government-owned auto company? Even one?

Beijing Automotive?

[Mike Wevrick]

“The US Treasury doesn’t want to run the company,” Fritz soothed, “they just want to make sure it’s well run.”

[Balantz]

Originally Posted by Mike Wevrick

Misleading thread title You almost gave me a heart attack. This idea is just insane. Can anyone think of any successful government-owned auto company? Even one?

Originally Posted by matt30

Volkswagon

Originally Posted by Beaverboy

Proton

Originally Posted by neg_matnik

the French government has a stake in Renault. Renault has a stake in Nissan. Both companies are doing OK. Better than GM anyways.

EDIT: I wanted to add some concrete numbers here. The French government's stake went from 53% to 15% over the years.
Take a look here: http://www.renault.com/en/finance/ac...u-capital.aspx
It also looks like Nissan has a 15% stake as well.

Originally Posted by Ray_STi

Maruti Suzuki in India
Ashok Leyland in India

Originally Posted by Eyeflyistheeye

Beijing Automotive?

[WRKX]

Originally Posted by su-be3

Yeah, I can think of one, Lada in Russia, best selling car there for over 40(?) years! Now, whether they still make them or not, I'm not sure! Of course you had to wait, oh 5 years to get one, and then you had to worry about parts being stolen from it after you got it! But hey, it was Russian motoring at it's best.
Now, when the U.S. government gets done with GM and Chrysler, you too will be able to get top notch gas efficent cars that will run on water, air, solar, hydro-electric, and wind and be big enough to hold you, your better half, the dog and one and a half kids in grand style and comfort! Don't wait to be the last on your block to get one! US-C-GM in coming your way!
I'm keeping my Subaru BAJA for as long as I can!
Keep it under 90, folks!

Yes they still make Ladas but nobody in Russia actually likes them. The only reason they're successful is because imported cars are taxed up the a$$. I don't know of anyone having Lada parts stolen or a 5 year waiting list. High end cars are what everyone want's and that's what gets stolen at least in Moscow and St. Petersburg.

[su-be3]

Originally Posted by WRKX

Yes they still make Ladas but nobody in Russia actually likes them. The only reason they're successful is because imported cars are taxed up the a$$. I don't know of anyone having Lada parts stolen or a 5 year waiting list. High end cars are what everyone want's and that's what gets stolen at least in Moscow and St. Petersburg.

My comments were meant in a tongue-in-cheek way, as I was describing the '50's and '60's in Communist Russia, which it was reported the the US press about life then. How true it was, I don't know.
And, I'm not saying that is what is going to happen here, but there is talk out there on how GM will be run by the government.
And please, no flames about that statement, I am NOT against the government, but I am being watchful of what may happen to GM and Chrysler. I am not so sure this is the right way to go with them.
Keep it under 90, folks!

[WRKX]

Originally Posted by su-be3

My comments were meant in a tongue-in-cheek way, as I was describing the '50's and '60's in Communist Russia, which it was reported the the US press about life then. How true it was, I don't know.
And, I'm not saying that is what is going to happen here, but there is talk out there on how GM will be run by the government.
And please, no flames about that statement, I am NOT against the government, but I am being watchful of what may happen to GM and Chrysler. I am not so sure this is the right way to go with them.
Keep it under 90, folks!

It all makes sense now Yeah back in the communist era I think there were 2 brands to choose from:
1. Lada
2. Volga