GOVERNMENT WILL OWN 'UP TO 69% OF GM'...

[Supermans]

http://www.cnbc.com/id/30951032

GM Bankruptcy Would Be 4th Largest In US History
Topics:Labor Unions | Treasury Department | Barack Obama | Politics & Government | Bankruptcy | Stock Market | Transportation | Automobile Industry
Sectors:Automobiles and Parts
Companies:Chrysler | General Motors Corp
By: CNBC.com With Reuters and AP | 27 May 2009 | 02:06 PM ET
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A General Motors bankruptcy filing seemed inevitable after a rebellion by its bondholders forced it to withdraw on Wednesday a plan to swap bond debt for company stock.

But there is no expectation of a bankruptcy filing by GM [GM 1.191 -0.249 (-17.29%) ] this week, a source familiar with the discussions said Wednesday.
General Motors logo

The source said it was likely that the timing of any next steps would be around the June 1 deadline the government has set for GM's stakeholders to reach agreement on restructuring.

GM has until Monday to complete a government-ordered restructuring that includes debt reduction, labor cost cuts and plant closures.

But a Chapter 11 reorganization is likely after the company said its offer to exchange $27 billion in unsecured debt for 10 percent of the company's stock had failed. GM has received $19.4 billion in federal loans.

The White House said Wednesday that it would not prejudge the outcome of discussions over the GM restructuring but said all stakeholders must be prepared to make sacrifices.

"The president strongly believes all stakeholders involved in the company—labor, management, bond holders and debt holders—are going to have to make sacrifices if we are going to see GM continue," White House spokesman Robert Gibbs told reporters.

"The deadline is near but it's not passed yet," Gibbs said. "We'll see. Look, there could be, as happened in the case of Chrysler, there could be progress on an agreement with stakeholders leading up to something that might be an eventual bankruptcy."

* GM: History of an Automaker

The statements came as crosstown rival Chrysler headed to court Wednesday to ask bankruptcy judge for permission to sell the bulk of its assets to a group headed by Italy's Fiat Group SpA in hopes of saving itself from liquidation. Attorneys for Chrysler maintain that the Fiat deal is the company's only hope to avoid being sold piece by piece, but car dealers, debtholders, former employees and others are protesting.

Chrysler filed for bankruptcy protection April 30, after the government ended talks with a group of holdout debtholders. Both automakers were pulled down by overwhelming debt, high pension, health care and other labor costs relative to competitors, a global auto sales slump and a dismal U.S. housing market that pulled down demand for pickup trucks, their top-selling vehicles.

News of the failed GM bond exchange offer sent its shares down 22 cents, or 15.3 percent, to $1.22 in afternoon trading.

John Pottow, a professor at the University of Michigan who specializes in bankruptcy, said GM evading Chapter 11 now is almost impossible. "They said no. That's it. They tried. That's why they're going to have to file for bankruptcy," Pottow said.

* Read: What Happens In Bankruptcy

GM spokesman Tom Wilkinson said the board will meet later this week to decide its next move, but he would not say exactly when. He also would not say if the company would soon file for Chapter 11, nor would he reveal what percentage of bondholders took the offer.

"The principal amount of notes tendered was substantially less than the amount required by GM to satisfy the debt reduction requirement under its loan agreements with the U.S. Department of the Treasury," GM said in a statement issued Wednesday.

The Obama administration has said it would only provide more funds if 90 percent of the bondholders, as well as unionized workers, agreed to concessions that substantially reduced GM's costs.

A GM bankruptcy would be the fourth-largest in U.S. history based on its $91 billion in assets, and the largest for an industrial company. The top bankruptcy by assets was the September 2008 filing by Lehman Brothers at $691 billion, followed by Washington Mutual at $327.9 billion, according to BankrupctyData.com. WorldCom, ranks third at $103.9 billion, while Chrysler's bankruptcy filing would be seventh at $39.3 billion.

There was a small hope Tuesday that GM could avoid a bankruptcy filing when the United Auto Workers union disclosed that it would take a 20 percent stake in GM — down from the original plan of 39 percent. That seemingly freed 19 percent of the Detroit-based company's shares to sweeten the pot for its recalcitrant bondholders.

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Current DateTime: 11:38:34 27 May 2009
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* Why GM May Be Better Off
* Chrysler May Energe From Bankruptcy
* GM Borrows Another $4 Billion As Bankruptcy Filing Looms
* Commentary: Chrysler...A Tale of Failed Relations

Wilkinson would not say why GM didn't make the offer to bondholders more attractive. The deadline for GM's bondholders to tender their debt was midnight Tuesday.

Because the bondholder deal did not go through, the equity freed by the UAW deal now apparently will go to the U.S. government, which may have to commit billions more for GM's restructuring in court.

The government's stake in the company originally was to be 50 percent, according to GM's regulatory filings. But it now could be as high as 69 percent. The Canadian government also could get equity for up to $8 billion in aid for the automaker.

Automakers worldwide are struggling as the global recession has reduced demand for new vehicles.

The UAW disclosed Tuesday it agreed to take a much smaller 17.5 percent stake in GM, plus a warrant for 2.5 percent more to partially fund the $20 billion that GM must put into a trust that will start paying retiree health care costs next year.

In exchange for agreeing to a lower equity ownership stake, GM promised the union $6.5 billion of preferred shares that pay 9 percent interest, plus a $2.5 billion note. The union, facing the possibility that it may not be able to quickly sell GM shares to fund its trust, preferred the certainty of the $585 million annual preferred stock dividend.

The remaining $10 billion will come from health care trust funds that GM already has set up. The trust will get a seat on GM's board as well, although it will have to vote at the direction of GM's other independent directors. The concession deal, on which roughly 61,000 workers will vote by Thursday, also froze wages and cut retiree health care benefits, performance bonuses and cost-of-living raises.

When GM announced its debt exchange last month, the company offered bondholders 225 shares of common stock for every $1,000 in debt -- or a 10 percent stake in the restructured company.

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In addition to the UAW's share, the federal government was to take 50 percent for exchanging a combined $20 billion of their debt to equity. Current stockholders would end up owning just 1 percent of the company.

A committee representing GM's biggest bondholders—mostly big banks and other institutional investors—has opposed the debt-for-equity swap from the start.

Smaller bondholders—individual investors like retirees and families—have also railed against the terms of the exchange. Both groups say the offer gives them too small a stake for the amount they are owed, and some have pledged to fight in bankruptcy court.

GM had said previously that the government was preventing it from offering bondholders more than 10 percent of the restructured company.

Some analysts said GM's bondholders may be holding out for better terms in bankruptcy, where they would normally get up to 40 percent of their holdings back.

Another factor complicating the decision of GM's bondholders: Many large investors hold insurance policies known as credit default swaps. Such policies would reimburse bondholders if there is a bankruptcy filing.

Analysts speculated that few bondholders agreed to GM's offer because they differed with the company's view of its stock value.

"They clearly have different valuation opinions as to how much the shares are worth," Pottow said. "If you're bullish on the prospects of the company, you might think that's a great deal. If you're bearish on the prospects of the company, you might not think that's a great deal."

[speedster]

This Government is out of control.

[Supermans]

Originally Posted by speedster

This Government is out of control.

I wonder after the Government Takeover of GM, should this forum continue with its current policy of censoring any negative talk about the current administration and its roll in controlling General Motors?

[nUcLeArEnVoY]

Originally Posted by Supermans

I wonder after the Government Takeover of GM, should this forum continue with its current policy of censoring any negative talk about the current administration and its roll in controlling General Motors?

I hope it does. Because I might be forced to leave if I feel like an outcast just because I'm a leftie and that I would have voted for the current president IF I did vote.

[diddiyo]

Originally Posted by nUcLeArEnVoY

I hope it does. Because I might be forced to leave if I feel like an outcast just because I'm a leftie and that I would have voted for the current president IF I did vote.

[Supermans]

Originally Posted by nUcLeArEnVoY

I hope it does. Because I might be forced to leave if I feel like an outcast just because I'm a leftie and that I would have voted for the current president IF I did vote.

Why is it that most self proclaimed leftists would rather censor and stop discussion about what is really happening at all fronts that include every form of media? If it wasn't for talk radio which is the only medium left that has an opposing opinion, none would be heard. There is just so few places Conservative American's can go these days to hear opinions. If there was an area of the forum where politics could be discussed, you would not be forced to enter that area..

In any case, the number has increased to the Government owning up to 74% of GM...

From what I understand by the wording used by the administration, Obama himself has stated he wants to have every car to be able to get 39MPG and not just the fleet average by a certain time. I'm hoping he made a mistake on that one and meant fleet average. So far this does not look well for the V8 SS and the Corvette.

If this forum keeps on censoring any anti- Government Policy on vehicles, and the media (CNN, NBC, CBS, ABC) keeps on defending those policies..Then this is not the America where it is the land of the free anymore.

If it wasn't for Government placing so many rules and regulations on the car companies over the years, they wouldn't be in this situation in the first place.

We as American's shouldn't have to sit back and be censored when we have a voice and an opinion in a forum that promotes a vehicle that will now be controlled by the Government. I think Tran should highly consider my opinion on this issue and have a talk once more with the mods to at least create an area of the forum that allows for any dissent against Government policy in relation to GM after the takeover is complete.


I definitely want to see a complete restructuring of GM by means of a re-writing of health care/legacy costs.. General Motors has become a health care provider over the years and a car company second.

I don't like and want Government control over our lives. All of the Government loan money given to GM which is essentially our money is going to be forgiven...Poof..Gone.. All of this cash infusion already given to GM was to make sure GM does not go into bankruptcy....What has happened since then?? This was all planned from the get go to give more power to the UNions and for the Government to take over control... Then you have Obama saying and I quote "You ain't seen nothing yet"... I have seen all I want to see and being quieted is not healthy for America.. We all need to stand together and discuss what we can do as Americans about what is happening to out country.. My two cents.. So Tran, please reconsider this forum policy of no political talk..

[diddiyo]

Originally Posted by Supermans

So Tran, please reconsider this forum policy of no political talk..

we had a politics forum in the past. didn't work out very well. eventually every thread was turned into a reps vs. dems shitfest.

+1 for no politics.

[BigRigMike]

Originally Posted by diddiyo

we had a politics forum in the past. didn't work out very well. eventually every thread was turned into a reps vs. dems shitfest.

+1 for no politics.

and a mod had to babysit the section 24 hours a day or else it would get out of control.

[Kyle2k]

Another reason this stuff is a bad idea is not because of the discussion but because of the polarized stance people take- if you want to preach to the choir and have everyone agree with you- go to a conservative forum- you won't accept anything someone from the left would say or pose as a possible solution so what other opinion but the conservative one do you want to hear?

The only reason for something like this is for people to complain. Do you enjoy listening to people bitch about stuff? I come on the the forum/computer to try avoid all that shit.

[Supermans]

Originally Posted by Kyle2k

Another reason this stuff is a bad idea is not because of the discussion but because of the polarized stance people take- if you want to preach to the choir and have everyone agree with you- go to a conservative forum- you won't accept anything someone from the left would say or pose as a possible solution so what other opinion but the conservative one do you want to hear?

The only reason for something like this is for people to complain. Do you enjoy listening to people bitch about stuff? I come on the the forum/computer to try avoid all that shit.

I hear what you are saying however the Government owning GM and making decisions on what car you can and can't buy in the future is not something you can avoid if you don't care about the issue. Furthermore it is being censored by the mainstream media and to some degree this forum by means of controlling political talk. I'm quite certain that a political forum can work if strict rules are put in place that would ban people from that particular section who can't discuss issues properly. If you let the area of the forum where only forum members who have over 500 posts be able to post...and then simply ban them from the area temporarily if they go too far or call any member names..Then it will be very easily moderated.. You avoid people creating forum names just to post something bad since they need 500 posts before they can post 1 bad thing.. It would be a simple way to moderate and people like you who do not want to participate can easily avoid reading that section... America is a free country for now and you have the power to not read what you don't want to read.. At the moment, we forum members do not have the power to say what we want to say on this subject which is censoring talk and is hurting all of us in the long run... I understand that Tran is admin and he can rule this forum as he wants..However it is only logical that with a changing of the guard at GM from a privately owned company to one owned by the Government...The rules should change here as well to allow for differing views which directly go against what the Obama administration are doing in regards to their new company GM...

[Kyle2k]

Originally Posted by Supermans

I hear what you are saying however the Government owning GM and making decisions on what car you can and can't buy in the future is not something you can avoid if you don't care about the issue. Furthermore it is being censored by the mainstream media and to some degree this forum. I'm quite certain that a political forum can work if strict rules are put in place that would ban people from that particular section who can't discuss issues properly. If you let the area of the forum where only forum members who have over 500 posts be able to post...and then simply ban them from the area temporarily if they go too far or call any member names..Then it will be very easily moderated.. You avoid people creating forum names just to post something bad since they need 500 posts before they can post 1 bad thing.. It would be a simple way to moderate and people like you who do not want to participate can easily avoid reading that section... America is a free country for now and you have the power to not read what you don't want to read.. At the moment, we don't have the power to say what we want to say on this subject which is censoring talk... I understand that Tran is admin and he can rule this forum as he wants..However it is only logical that with a changing of the guard at GM from a privately owned company to one owned by the Government...The rules should change here as well...

I still don't see how this will constructively affect anyones lives though lol...Will we determine blame (I'm sure some have already made up their minds on these issues)? Will we find away to change this or effect the future of GM? Or....will it just be politicking at its best- ramping up fear and doubt in an established plan that has not yet reached its solution.

From what I can tell so far, all the doomsday scenarios can be likened to planting a sappling and then cutting it down the next year because it wasn't the size of a 60ft tree that had been growing for 100's of years.

[MrIcky]

OK, I personally think that in the absolute best tradition of American Freedom- it's Tran et al's board and if he wants to limit political discussion- Fine by me. There are many boards where you can debate your left vs right til your blue in the face. I haven't found the most recent moderation attempts to be to onerus- keep it honest, keep it factual and I haven't been censored yet.

But I want to make some points that just piss me off on the 'doomsday scenarios'. I'm by nature very optimistic, but there has been complete head in the clouds unreality in calling people doomsday chicken little naysayers.

Here is the progression of some of the overly optimistic people who have been cheered on this board. It's almost like the stages of grief here..

* GM wants money from the Govt. Everyone on the boards needs to support that because GM has a plan! Posts are put up about what we can do to help GM. People who question that are internet bullied.

* Some people said that doesn't sound right, can we see this plan? The response from prominent people on this board was no way- they don't need to show it to you, you need to keep your plans secret because of competition! Turns out they didn't have a plan that could prevent bankruptcy.

* GM wants even more money month after month even though it was apparent 3 months ago that bankruptcy was MORE than 50/50 odds. "GM won't file bankruptcy, quit spouting off with the Chicken Little crap" was the response.

* The Government is going to CONTROL the majority of GM's stocks via either bankruptcy or assistance. "No they're not- they don't want to control GM. The current administration has said he doesn't want to take part in the day to day management" was the response. Maybe they don't want to take place in the day to day management, but it's pretty clear they want to decide GM's direction at this point.

* Bankruptcies ALWAYS take time, now people are thinking that this is going to happen over a weekend or something with no shutdowns. Do you want to side with the optimists or the realists on that bet? (edit:some of these people are same people who were saying a bankruptcy would never happen, and we should just give money to GM no questions asked)

Maybe I didn't make my point well; I'll clarify it just in case. Since January, there has been call after call to not post negative opinions on the direction of GM. It's been labeled as "panicky" and "sky is falling" every time someone looks at the train wreck and calls it a train wreck instead of calling it a butterfly. Well here we are 4 days from June and the tally is: $ was thrown at a bankrupt company that had no plan, but now has a new plan in the last week to give 74% control to the Government and 17% control to the Unions to survive. I hate to say it- this bankruptcy does not appear to be a 'makes you stronger-lean and mean!' bankruptcy. It actually appears from a distance that Chrysler's bankruptcy is much better planned. GM's bankruptcy's is more of a 'it makes your company much much smaller while increasing bureaucracy' sort of bankruptcy.

I've had it up to my eyebrows with people blindly defending GM and their direction based on 'lets not have panic posts'. And you can look at my posts, I haven't been panicky. I'm still not panicky- I'm realistic and I'm not about to call this train wreck a butterfly.

[dbotsfordtat]

Wall Street owns "The Government", "The Government" owns GM, and I'm still waiting for my Camaro. IMO "The Government" isn't some secretive shadow organization trying to take over private industry, they are private industry. They're Bankers, Hedgefund managers, CEO's, ect... Aristocrats hoarding wealth and screwing the working class like God intended.
"Power corrupts, absolute power corrupts absolutely". I just want my 426, Washington and Wall Street can fight over the rest.

[Captain Awesome]

+1 for a uncensored political thread.

Do what I do on my forums and make it only accesssible by request. People will agree with a policy that says they will not call other members names or use profanity or racial slurrs and if they do they get their access removed.

People who are just regular forum members cannot see the posts or read them because they have not requested access.

The + side for my idea is that it really eliminated most of the controverisal posts from the main site because people had a real place to put that stuff.