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Old 04-23-2009, 03:03 AM   #1
AVANTI R5
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Default GM won't make $1B June debt payment

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NEW YORK (CNNMoney.com) -- General Motors won't be making a June 1 debt payment of $1 billion, a company spokeswoman said Wednesday.

The debt is due the day after GM's government-imposed May 30 deadline to have an aggressive restructuring plan in place or be left to face bankruptcy.

GM (GM, Fortune 500) said it wouldn't make the June 1 payment because as part of its restructuring, the company will be offering to exchange bondholder's debt for equity in the company.

"We're going to have an exchange offer open anyway," said GM spokeswoman Julie Gibson.

A press representative for GM bondholders was not immediately available to comment.

While GM CEO Fritz Henderson has said that bankruptcy has become "more likely" in recent weeks, he has also said that an out-of-court restructuring remains a viable option.

GM has received $13.4 billion in federal loans and could receive an additional $5 billion before May 30. Beyond that, the Treasury department task force overseeing restructuring for GM and Chrysler has not said how much more support GM might be eligible to receive if it is able to restructure and reduce its debts and other obligations.
http://money.cnn.com/2009/04/22/auto...on=money_autos
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Old 04-23-2009, 09:18 AM   #2
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my guess is they will go bankrupt. that is why they are closing plants for 9 weeks.
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Old 04-23-2009, 09:47 AM   #3
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why doesn't the govt just anticipate that they won't be able to pay, and only give them $4b?

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my guess is they will go bankrupt. that is why they are closing plants for 9 weeks.
and this has been written very plainly on the wall since before the govt gave them their first 'bailout'
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Old 04-23-2009, 09:50 AM   #4
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Man, everybody and thier brother knew this, and GM keep spouting off dribble like "we think we can still restructure and not need bankruptcy."

Stop lying. Say your screwed and lets get the precedings on the way! I want to see the Unions crumble.
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Old 04-23-2009, 10:23 AM   #5
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It's the political and ethical way of doing things. A corporation making an inviting statement of bankruptcy will not sit well with the general public and can result in its demise in the near future. Making every 'effort' to avoid bankruptcy and accepting the "only" alternative; will at the very least reflect sympathy from Americans and give a gleaming spec of hope to support the company when they turn around from this.

GM or any company for that matter will not accept bankruptcy as their first choice, even if they know it's their only choice. They will show that they will try everything they can to avoid it.

What do you think is more realistic and easier to swallow; that GM throw in the towel and have the Americans give up on them entirely or GM demonstrate going down fighting until they've "exhausted all resources" so that the public can give them a second chance?
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Old 04-23-2009, 12:19 PM   #6
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^ That would be the case if they weren't relying on billions in government aid lined by taxpayers' dollars. I'd rather see them go down than watch our government throw additional funding at them only to see them go down anyway while they are unable to pay back the loan while TARP has a few billion less. I'd rather have seen that go toward another stimulus payment like last year.
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Old 04-23-2009, 12:52 PM   #7
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Now I am assuming that they are going to claim bankruptcy and separate their good assets into a new GM while they leave the toxic assets in the old GM and let it fail. But, my question is, could the TARP "loan" given to them be labeled as a bad asset and will GM claim bankruptcy on that loan and not have to repay it?

Granted that would most certainly be suicide as the public will turn against them very quickly, but is it an option? Or will they have to pay back every penny over time?
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Old 04-23-2009, 01:20 PM   #8
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why doesn't the govt just anticipate that they won't be able to pay, and only give them $4b?
Because this has nothing to do with the government. The article is about GM defaulting on its regular debt, not the government loans.

Either way, GM is gambling. They want to pressure bondholders into trading bonds for common stock to reduce their debt.
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Old 04-23-2009, 01:24 PM   #9
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Between this and the 9 week shutdown of plants >>>
Setting up for bankruptcy. GM's position >>> F paying this $1b. Going bankrupt anyway.
That 9 weeks is announced for the time they will be doing their re-org.

JMO
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Old 04-23-2009, 04:45 PM   #10
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Didnt I just see a GM commercial in which they said they'd make your car payment of up to $500 if you were laid off or something?
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Old 04-23-2009, 05:02 PM   #11
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FAIl, bankrupt, FAIL
bye bye GM. nobody wants your crappy cars. failed business plan, failed union, fail.

Here's a thought: build light rail cars and the like, in the factories which will sit vacant for many years.
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Old 04-23-2009, 05:29 PM   #12
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^ I want the Vette and the CTS
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Old 04-23-2009, 05:39 PM   #13
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Let GM die, bring in Fiat, Puegot, Citroen, Alpha, and Opel.
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Old 04-23-2009, 05:46 PM   #14
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Let GM die, bring in Fiat, Puegot, Citroen, Alpha, and Opel.
you sure about that?
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Old 04-23-2009, 06:03 PM   #15
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Let GM die, bring in Fiat, Puegot, Citroen, Alpha, and Opel.
First, GM's cars are WAY more reliable than Alfa or Fiats. Peugot sold like crap here and is why they are not here now.
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Old 04-23-2009, 06:06 PM   #16
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FAIl, bankrupt, FAIL
bye bye GM. nobody wants your crappy cars. failed business plan, failed union, fail.

Here's a thought: build light rail cars and the like, in the factories which will sit vacant for many years.

I would take a Vette, a CTS ...and the new Camero looks awesome...Additionally that Saturn/Pontiac 2 seater is an awesome little car. the cars have actually gotten much better.
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Old 04-23-2009, 06:08 PM   #17
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Originally Posted by bheinen74 View Post
FAIl, bankrupt, FAIL
bye bye GM. nobody wants your crappy cars. failed business plan, failed union, fail.


That's funny...

Isn't GM the second biggest car manufacturer on the planet? No one wants their cars huh?

you = fail
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Old 04-23-2009, 06:13 PM   #18
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That's funny...

Isn't GM the second biggest car manufacturer on the planet? No one wants their cars huh?

you = fail
NO, VW is the 2nd.
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Old 04-23-2009, 06:23 PM   #19
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NO, VW is the 2nd.
I think that's only based on this year's statistics up to this point.
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Old 04-23-2009, 06:24 PM   #20
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NO, VW is the 2nd.
3rd makes the point no less valid. They sell massive amounts of cars.
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Old 04-23-2009, 08:00 PM   #21
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3rd makes the point no less valid. They sell massive amounts of cars.
no, the point is valid: their cars are generally unappealing enough that they are forced to roll out huge incentives and end up turning their profits into massive losses.
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Old 04-23-2009, 08:35 PM   #22
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no, the point is valid: their cars are generally unappealing enough that they are forced to roll out huge incentives and end up turning their profits into massive losses.
Not necessarily. Let's not fool ourselves into thinking that GM was the only auto manufacturer to offer them. Toyota was offering plenty of incentives on almost their entire fleet in 2007, and more so after that. (I spent some time working for Toyota, so I remember seeing the promotional offers.) What mass production auto manufacturer isn't offering incentives now? Does that make their sales any more or less legitimate than GM's? Even BMW had 0.9% APR incentives on almost their whole fleet, M cars included.
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Old 04-23-2009, 09:10 PM   #23
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Now I am assuming that they are going to claim bankruptcy and separate their good assets into a new GM while they leave the toxic assets in the old GM and let it fail. But, my question is, could the TARP "loan" given to them be labeled as a bad asset and will GM claim bankruptcy on that loan and not have to repay it?

Granted that would most certainly be suicide as the public will turn against them very quickly, but is it an option? Or will they have to pay back every penny over time?
The loan is not an asset, it's an obligation. An asset, in terms of a liquidation bankruptcy, are things (with market value) that can be taken away from owner by the court and sold to new investors to pay off obligations.

Part of what happens in a Bankruptcy proceeding is determine who gets paid first when the assets are sold. All of the debts are ranked (and you bet the federal governemnt will be at the top of that list) and as the assets are sold off - the ones on the list are paid off in a certain order according to importance. Creditors often don't get the full amount they want if their loan was unsecured.


A "prepackaged bankruptcy" is when the entity going bankrupt makes an agreement with their creditors to give them ownership as long as they cancel the loan and keep the current management in place (sometimes though the management is changed). The rationale being that the creditors could recover their costs much better if they got something that could make money (a "whole" company) instead of the money they get from selling off the company piece by piece. If they, creditors, don't agree with the package the court forces them to go into liquidation.

Stocks are rendered valueless on the stock exchange and removed from the listing.

Last edited by matt30; 04-23-2009 at 09:16 PM.
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Old 04-23-2009, 09:21 PM   #24
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Not necessarily. Let's not fool ourselves into thinking that GM was the only auto manufacturer to offer them. Toyota was offering plenty of incentives on almost their entire fleet in 2007, and more so after that. (I spent some time working for Toyota, so I remember seeing the promotional offers.) What mass production auto manufacturer isn't offering incentives now? Does that make their sales any more or less legitimate than GM's? Even BMW had 0.9% APR incentives on almost their whole fleet, M cars included.
incentives when you are simply narrowing your profit margin are one thing. incentives when your profit margin is a negative value are another.
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Old 04-23-2009, 09:28 PM   #25
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Let GM die, bring in Fiat, Puegot, Citroen, Alpha, and Opel.
I thought the funnier part was that Opel was GM until recently.
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