GM borrows $4 billion more, prepares for bankruptcy

fireresq157 · 05-22-2009, 10:33 PM

Found this a few minutes ago, an update to the current situation. P.S. Don't shoot the messenger. God I hope things work out.

http://www.comcast.net/articles/fina...NESS-US-AUTOS/

Bailey, Reuters
3 hours ago

DETROIT — General Motors Corp on Friday borrowed another $4 billion from the U.S. Treasury and won a cost-cutting deal from Canadian auto workers as a showdown with bondholders set the stage for a bankruptcy filing by the end of the month.

The latest emergency funds extended by the Obama administration take the total government funding to keep GM afloat since the start of the year to $19.4 billion.

GM said it expected that total to rise to $27 billion after June 1, a government-imposed deadline for the embattled automaker to achieve a sweeping restructuring analysts say will require bankruptcy to complete.

The tentative agreement with the Canadian Auto Workers union, if ratified, would reduce hourly compensation costs by about 28 percent after including a round of concessions the union agreed to give in March.

A day earlier, GM won similar concessions from the United Auto Workers to reduce operating costs and pay the union in stock instead of cash to fund a retiree healthcare trust.

Along with plans to drop dealers and unprofitable brands like Hummer, Saturn, Pontiac, Saab and Opel, the pair of labor deals would help clear the way for GM to enter bankruptcy protection with the backing of the Obama administration.

"All of our discussions that we had, it's very likely that they will go into Chapter 11," CAW President Ken Lewenza said at a Toronto news conference to announce the union's tentative contract agreement with GM.

D-Day for GM Dealers (3:33)
In Europe, GM also appeared to be nearing a resolution of its long-running effort to find a buyer for its Opel unit.

Magna International emerged as the favorite to acquire Opel after top German officials said the Canadian car parts group had submitted a better plan than rival bidders Fiat and Belgian-listed private equity investor RHJ International.

BONDHOLDERS NEXT IN LINE

GM faces a June 1 deadline to restructure its debt and operations and has said it could file for bankruptcy if it fails to get bondholders to agree to forgive some $24 billion -- or 90 percent -- of the amount they are owed.

Under Obama administration orders, GM has offered bondholders a 10 percent stake in a restructured company.

A spokesman for a committee representing GM bondholders said institutional investors solidly oppose that offer as insufficient.

"It's been a universal no from the get-go," said Nevin Reilly, a committee spokesman. "Bondholders are being seen as speculative bad guys; but bondholders are investors, many of whom put their retirement money into GM."

Creditors have complained their rights have been ignored in the restructuring of both GM and its smaller rival Chrysler, which has been operating in bankruptcy since April 30.

GM and Chrysler plan to drop about 2,400 U.S. dealerships, a move criticized by some U.S. lawmakers.

Critics argue that the Obama administration has favored the position of unionized auto workers and has run roughshod over claims from other creditors in the process.

Four Republican lawmakers sent a letter of protest to Treasury Secretary Timothy Geithner on Friday saying that the Obama administration was undermining GM bondholders in order to favor the UAW, a political ally.

"We are extremely concerned that in the name of restructuring General Motors, the presidential task force on the auto industry has begun waging what some believe amounts to a war on capital," the letter said.

"Bondholders must have a seat at the table during negotiations in how the company would be restructured," said the letter to Geithner from Representatives Jeb Hensarling, Eric Cantor, Mike Pence and Pete Sessions.

Austan Goolsbee, a member of the White House Council of Economic Advisers and the autos task force, said GM bondholders need to recognize that they must sacrifice.

Goolsbee said he expects GM's restructuring efforts to run right up to the June 1 deadline but not beyond. "Usually these things, and as you saw with Chrysler, go right up to the deadline," he said.

The CAW's Lewenza said the Canadian union had been told that it needed to reach a new contract deal with GM urgently so that Obama could review the terms of GM's business plan.

Lewenza said he was told that Obama would need to see the GM business plan, which will include details of how many jobs it will cut, by the weekend.

The Obama administration steered Chrysler into bankruptcy on April 30 with an aim to push it through the court process within 60 days. That bankruptcy has been watched as a kind of dry run for the more complex reorganization expected from GM and has moved quickly so far.

The Chrysler plan is to sell substantially all of its assets to a new company owned by Fiat, a UAW healthcare trust, and the U.S. and Canadian governments.

Fiat, Chrysler and the automaker's creditors filed court papers on Friday in support the planned sale and urged a federal judge to reject an appeal by a group of Indiana pension funds that have sought to have the transaction postponed.

Fiat said in court papers that it was concerned about the "deteriorating value" of Chrysler's assets and said a delay "could ultimately prove fatal" to its plans.

GM shares -- which the automaker has warned could be worthless in bankruptcy -- closed down 25 percent on Friday.

GM bonds have been trading for pennies on the dollar for months in a sign of expected default. GM's 8.375 percent notes due in 2003 traded on Friday at about 5 cents on the dollar.

(Reporting by Kevin Krolicki and David Bailey; Additional reporting by John McCrank in Toronto; Kevin Drawbaugh, John Crawley and Jeremy Pelofsky in Washington; Walden Siew, Tom Hals and Caroline Humer in New York; Noah Barkin and Christiaan Hetzner in Germany; Editing by Gerald E. McCormick and Patrick Fitzgibbons, Gary Hill)

bobby35ny · 05-22-2009, 11:52 PM

Bonds at 5 cents on the dollar, man the bondholders are getting screwed.

-bobby

Mr_Draco · 05-23-2009, 06:47 AM

Quote:

Originally Posted by fireresq157

GM's 8.375 percent notes due in 2003 traded on Friday at about 5 cents on the dollar.

wow. The bondholders better take GM's deal of 10 cents on the dollar right now when they can. They will only get half that before June 1 and afterwards they won't be worth nothing.

Hylton · 05-23-2009, 07:30 AM

If I was a bondholder, I'd take my chances in the courts because at least there they have a say in the matter.

Super83Z · 05-23-2009, 07:50 AM

Quote:

Originally Posted by Hylton

If I was a bondholder, I'd take my chances in the courts because at least there they have a say in the matter.

That wouldn't work. GM won't land in court, the government won't allow it. They have spent too much money on GM to let it go to court and get liquidated. If any part of GM goes to court it will just be the "bad" GM which doesn't have anywhere near the value of the rest of the company.

Hylton · 05-23-2009, 07:52 AM

Quote:

Originally Posted by Super83Z

That wouldn't work. GM won't land in court, the government won't allow it. They have spent too much money on GM to let it go to court and get liquidated. If any part of GM goes to court it will just be the "bad" GM which doesn't have anywhere near the value of the rest of the company.

Dude - bankruptcy is court.

carfansince73 · 05-23-2009, 08:36 PM

This sucks bigtime for the bondholders!!! Never before in bankruptcy would a non-secured creditor (greedy-ass union) be able to get in line before a secured creditor (bondholders). Obama needs those unions in his corner so he's doing all he can to make sure they come out in the black on this one, meaning they will own more of the company than those that have been buying GM's debt all these years. What pile of F'n crap!!!

I want my Camaro, don't get me wrong, but this deal should work like it's supposed to meaning the bondholders should be majority owners, not the union!

Super83Z · 05-23-2009, 08:59 PM

Quote:

Originally Posted by Hylton

Dude - bankruptcy is court.

Dude-this isn't your typical bankruptcy.

DeathChill · 05-24-2009, 03:07 PM

Quote:

Originally Posted by Super83Z

Dude-this isn't your typical bankruptcy.

Yes, yes it is. They can't just make up a whole new bankruptcy process for GM. GM will have to go through the courts just like any other business (CHRYSLER!!!).

rayhawk · 05-24-2009, 05:03 PM

Quote:

Originally Posted by carfansince73

This sucks bigtime for the bondholders!!! Never before in bankruptcy would a non-secured creditor (greedy-ass union) be able to get in line before a secured creditor (bondholders). Obama needs those unions in his corner so he's doing all he can to make sure they come out in the black on this one, meaning they will own more of the company than those that have been buying GM's debt all these years. What pile of F'n crap!!!

I want my Camaro, don't get me wrong, but this deal should work like it's supposed to meaning the bondholders should be majority owners, not the union!

I agree 100%. Who the hell thinks giving the company to the union is going to work out? Who will they report to? The president? Get your GM vehicles now, because in 10 years they will be a shell of what they are now, and we can thank the all knowing government for it.

fdjizm · 05-24-2009, 05:16 PM

So they dont pay back 15.4 billion?

nice completely free money i'm loving where our taxes go, and they said it was a loan. RIIIGHT!

MerF · 05-24-2009, 06:04 PM

I don't understand most of it, and I'm not an Obama-basher...but I can't help but see this bondholder/union shares thing as suspicious.

Super83Z · 05-24-2009, 06:07 PM

Quote:

Originally Posted by DeathChill

Yes, yes it is. They can't just make up a whole new bankruptcy process for GM. GM will have to go through the courts just like any other business (CHRYSLER!!!).

No, no its not. "Bad GM" will go to court and be sold off. "Good GM" will not and will restructure in 30-60 days then reopen. So its not your typical bankruptcy. A typical bankruptcy would have all of it go into court and EVERYTHING sold off.

Super83Z · 05-24-2009, 06:12 PM

Quote:

Originally Posted by fdjizm

So they dont pay back 15.4 billion?

nice completely free money i'm loving where our taxes go, and they said it was a loan. RIIIGHT!

Are you really that upset over 15.4 billion, especially when the banks got 700 Billion that will never ever get paid back?

05-22-2009, 10:33 PM	#1
fireresq157 Drives: 1997 SS & 2010 2SS/RS Join Date: Aug 2006 Location: South Florida Posts: 1,027	GM borrows $4 billion more, prepares for bankruptcy Found this a few minutes ago, an update to the current situation. P.S. Don't shoot the messenger. God I hope things work out. http://www.comcast.net/articles/fina...NESS-US-AUTOS/ Bailey, Reuters 3 hours ago DETROIT — General Motors Corp on Friday borrowed another $4 billion from the U.S. Treasury and won a cost-cutting deal from Canadian auto workers as a showdown with bondholders set the stage for a bankruptcy filing by the end of the month. The latest emergency funds extended by the Obama administration take the total government funding to keep GM afloat since the start of the year to $19.4 billion. GM said it expected that total to rise to $27 billion after June 1, a government-imposed deadline for the embattled automaker to achieve a sweeping restructuring analysts say will require bankruptcy to complete. The tentative agreement with the Canadian Auto Workers union, if ratified, would reduce hourly compensation costs by about 28 percent after including a round of concessions the union agreed to give in March. A day earlier, GM won similar concessions from the United Auto Workers to reduce operating costs and pay the union in stock instead of cash to fund a retiree healthcare trust. Along with plans to drop dealers and unprofitable brands like Hummer, Saturn, Pontiac, Saab and Opel, the pair of labor deals would help clear the way for GM to enter bankruptcy protection with the backing of the Obama administration. "All of our discussions that we had, it's very likely that they will go into Chapter 11," CAW President Ken Lewenza said at a Toronto news conference to announce the union's tentative contract agreement with GM. D-Day for GM Dealers (3:33) In Europe, GM also appeared to be nearing a resolution of its long-running effort to find a buyer for its Opel unit. Magna International emerged as the favorite to acquire Opel after top German officials said the Canadian car parts group had submitted a better plan than rival bidders Fiat and Belgian-listed private equity investor RHJ International. BONDHOLDERS NEXT IN LINE GM faces a June 1 deadline to restructure its debt and operations and has said it could file for bankruptcy if it fails to get bondholders to agree to forgive some $24 billion -- or 90 percent -- of the amount they are owed. Under Obama administration orders, GM has offered bondholders a 10 percent stake in a restructured company. A spokesman for a committee representing GM bondholders said institutional investors solidly oppose that offer as insufficient. "It's been a universal no from the get-go," said Nevin Reilly, a committee spokesman. "Bondholders are being seen as speculative bad guys; but bondholders are investors, many of whom put their retirement money into GM." Creditors have complained their rights have been ignored in the restructuring of both GM and its smaller rival Chrysler, which has been operating in bankruptcy since April 30. GM and Chrysler plan to drop about 2,400 U.S. dealerships, a move criticized by some U.S. lawmakers. Critics argue that the Obama administration has favored the position of unionized auto workers and has run roughshod over claims from other creditors in the process. Four Republican lawmakers sent a letter of protest to Treasury Secretary Timothy Geithner on Friday saying that the Obama administration was undermining GM bondholders in order to favor the UAW, a political ally. "We are extremely concerned that in the name of restructuring General Motors, the presidential task force on the auto industry has begun waging what some believe amounts to a war on capital," the letter said. "Bondholders must have a seat at the table during negotiations in how the company would be restructured," said the letter to Geithner from Representatives Jeb Hensarling, Eric Cantor, Mike Pence and Pete Sessions. Austan Goolsbee, a member of the White House Council of Economic Advisers and the autos task force, said GM bondholders need to recognize that they must sacrifice. Goolsbee said he expects GM's restructuring efforts to run right up to the June 1 deadline but not beyond. "Usually these things, and as you saw with Chrysler, go right up to the deadline," he said. The CAW's Lewenza said the Canadian union had been told that it needed to reach a new contract deal with GM urgently so that Obama could review the terms of GM's business plan. Lewenza said he was told that Obama would need to see the GM business plan, which will include details of how many jobs it will cut, by the weekend. The Obama administration steered Chrysler into bankruptcy on April 30 with an aim to push it through the court process within 60 days. That bankruptcy has been watched as a kind of dry run for the more complex reorganization expected from GM and has moved quickly so far. The Chrysler plan is to sell substantially all of its assets to a new company owned by Fiat, a UAW healthcare trust, and the U.S. and Canadian governments. Fiat, Chrysler and the automaker's creditors filed court papers on Friday in support the planned sale and urged a federal judge to reject an appeal by a group of Indiana pension funds that have sought to have the transaction postponed. Fiat said in court papers that it was concerned about the "deteriorating value" of Chrysler's assets and said a delay "could ultimately prove fatal" to its plans. GM shares -- which the automaker has warned could be worthless in bankruptcy -- closed down 25 percent on Friday. GM bonds have been trading for pennies on the dollar for months in a sign of expected default. GM's 8.375 percent notes due in 2003 traded on Friday at about 5 cents on the dollar. (Reporting by Kevin Krolicki and David Bailey; Additional reporting by John McCrank in Toronto; Kevin Drawbaugh, John Crawley and Jeremy Pelofsky in Washington; Walden Siew, Tom Hals and Caroline Humer in New York; Noah Barkin and Christiaan Hetzner in Germany; Editing by Gerald E. McCormick and Patrick Fitzgibbons, Gary Hill)

05-22-2009, 11:52 PM	#2
bobby35ny Drives: 18 ZL1 A10 Join Date: Nov 2008 Location: South East, FL Posts: 3,023	Bonds at 5 cents on the dollar, man the bondholders are getting screwed. -bobby __________________ 2017 ZL1 M6 Bog City, 2013 ZL1 M6, 2010 2SS M6 ZL1::J-E-T-S JETS JETS JETS

05-23-2009, 07:30 AM	#4
Hylton Drives: fanboys and ass kissers crazy. Join Date: May 2008 Location: Ottawa, Ontario Posts: 7,275	If I was a bondholder, I'd take my chances in the courts because at least there they have a say in the matter. __________________ "BBOMG - More than just a car show.... It's an experience!"

05-23-2009, 08:36 PM	#7
carfansince73 Drives: Carefully Join Date: Mar 2008 Location: Florida Posts: 1,210 View My Garage	This sucks bigtime for the bondholders!!! Never before in bankruptcy would a non-secured creditor (greedy-ass union) be able to get in line before a secured creditor (bondholders). Obama needs those unions in his corner so he's doing all he can to make sure they come out in the black on this one, meaning they will own more of the company than those that have been buying GM's debt all these years. What pile of F'n crap!!! I want my Camaro, don't get me wrong, but this deal should work like it's supposed to meaning the bondholders should be majority owners, not the union! __________________ 2010 1SS RS, LS3, SIM/Black, painted rally stripes, AAC sidemarkers, Sunroof, B.A. sound sys; 20x9.5 & 20x11 SV1-C5's; MGW short shifter; Hotchkis Track Pack; Corsa catback; Kooks 1 7/8"; ADM Street; Magnacharger TVS2300 - 548rwhp/512rwtq 1100- 2/18/09; 3800- 6/15/09 VIN#18308; Delivered 6/29/09!!!!! 2014 CTS-V Sedan, Black/Black, Auto, Recaros, Ultra-view, Red Brembos. Stock

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05-24-2009, 05:16 PM	#11
fdjizm Account Suspended Drives: 2008 Mustang GT/CS Join Date: Mar 2009 Location: New Jersey Posts: 1,429 View My Garage	So they dont pay back 15.4 billion? nice completely free money i'm loving where our taxes go, and they said it was a loan. RIIIGHT!

05-24-2009, 06:04 PM	#12
MerF Go Rays! Drives: 03 Trailblazer Join Date: May 2007 Location: St Pete, Florida Posts: 2,532	I don't understand most of it, and I'm not an Obama-basher...but I can't help but see this bondholder/union shares thing as suspicious.