General Motors (GM) 01 (Jun 08 - Jul 10 )

[kennynah]

i'll bet a buck...that GM will not fold

[millionairemind]

GM, Chrysler Said to Consider Bankruptcy to Get U.S. Bailout
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By James Rowley and Linda Sandler

Dec. 4 (Bloomberg) -- General Motors Corp. and Chrysler LLC executives are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multibillion-dollar government bailout, said a person familiar with their internal discussions.

Auto executives have warned bankruptcy would lead to liquidation as customers abandoned the companies. Staff for three members of Congress have asked restructuring experts if a pre- arranged bankruptcy -- negotiated with workers, creditors and lenders -- could be used to reorganize the industry without liquidation, a person familiar with that matter said.

“It’s essential for Congress to do due diligence on bankruptcy as an option so it gets a clear sense from independent people what the risks and possibilities are,” said Alan Gover of White & Case, who has been lead lawyer in $60 billion of corporate-debt restructurings.

Many solutions to the automakers’ financial problems are on the table in discussions in Washington and around the country among company officials, lenders, union officials and other interested parties, the person briefed on internal talks said.

Negotiations are splintered among small groups, making it unlikely a proposed solution such as bankruptcy would emerge until next week at the earliest, the person said.

Publicly GM Chief Executive Officer Rick Wagoner has said bankruptcy would mean liquidation because customers would refuse to buy cars from a company that might not be able to back warranties or supply parts. Bankruptcy is “way down the list of options,” GM board member George Fisher said yesterday in an interview. GM spokesman Tony Cervone had no additional comment.

Chrysler

Chrysler spokeswoman Shawn Morgan didn’t have an immediate comment.

GM and Chrysler told Congress Dec. 2 that they need $11 billion in government loans just to survive the year as the auto industry slump deepens. To get the money, the companies agreed to slash payrolls, shed brands and shrink dealerships. Bankruptcy was not part of their plans.

GM, Chrysler and Ford Motor Co. asked for a $34 billion bailout package, about a third larger than the $25 billion Energy Department loan program the White House has previously supported to finance more fuel-efficient cars. Democrats in Congress, led by House Speaker Nancy Pelosi, pledged to keep carmakers out of bankruptcy.

The Democrats’ goal of preserving a U.S. auto industry is not doable without a bankruptcy, said Lynn LoPucki, who teaches bankruptcy law at Harvard University and the University of California at Los Angeles.

Workout Requirement

“A workout requires everybody’s agreement,” he said. “If I own bonds, GM can’t force me to take less than 100 cents on the dollar outside of bankruptcy court. Bankruptcy is the only thing that can work because GM and the government need the ability to force people to go along with the plan. Paying everyone in full is prohibitively expensive.”

About 77 percent of billion-dollar companies survive bankruptcy, according to LoPucki’s database, while the others sell their business.

“Billion-dollar companies rarely go into bankruptcy and liquidate piecemeal,” he said.

The government could guarantee the warranties given to consumers on cars bought from a bankrupt automaker, said Mark Bane, a bankruptcy lawyer with Ropes & Gray in New York. Government money could also “ensure that parts suppliers will be paid,” he said.

Less Money

Less government money would be needed in a prepackaged bankruptcy, which might last only two months, compared with two years or more for a regular bankruptcy, according to Bane. In a prepack restructuring, an automaker would go into court after reaching agreement with lenders, workers and suppliers on what each would give up and on the business plan to be followed.

Government aid might be needed only for the period when the company was gaining consent from its constituencies -- which might take as long as six to 12 months, Bane said.

President-elect Barack Obama said lawmakers were right to demand that U.S. automakers provide a plan to sustain their businesses before getting federal aid and that their latest efforts represent “a more serious set” of proposals than earlier ones.

Any assistance must be “based on realistic assessments of what the auto market is going to be and a realistic plan for how we’re going to make these companies viable over the long term,” Obama said yesterday.

Obama View

A representative of Obama’s team earlier contacted at least one bankruptcy-law firm to say Daniel Tarullo, a professor at Georgetown University’s law school who heads Obama’s economic policy working group, would call to discuss the workings of a so- called prepack, according to this person.

Tarullo referred questions on a prepack to the transition team press office. Turullo’s staff “has received a lot of calls and unsolicited advice,” and that didn’t necessarily mean that “we hold a position that someone else may have advocated,” transition team spokesman Tommy Vietor said Nov. 21.

Officials of the three automakers told members of Congress last month they had studied a pre-arranged bankruptcy, championed by Republican lawmakers such as Senator Bob Corker of Tennessee, before dismissing the idea as unworkable.

Taxpayers would be protected if automakers went through Chapter 11 proceedings because U.S. bankruptcy laws put everyone on an even footing, lawyers said. For instance, trade vendors out of court might insist on payment in 10 days instead of 60 days, and couldn’t do that in court, they said. Bankruptcy might also help automakers to get rid of some health and labor costs that burden them, they said.

“These Wall Street geniuses and law firms are coming up with all these solutions that make them a lot of money,” GM’s lead independent director, Fisher said. “The truth of the matter is that this is so complex, the what-ifs game has so many legs on it, I could spend the next 24 hours talking on the what-ifs.”

[millionairemind]

Put me on the "idle worker" list so I can collect free money everyday..

US auto union makes concessions
By Bernard Simon in Toronto, Daniel Dombey in Washington, and Julie MacIntosh and Nicole Bullock in New York

Published: December 3 2008 21:15 | Last updated: December 3 2008 21:15

The United Auto Workers on Wednesday made significant concessions as the US’s three largest car makers prepared to appear at Congress on Thursday to make their case for emergency funding.

The main car workers’ union said Wednesday that it would suspend a contentious practice that allows so-called “idled” car workers to collect virtually full pay and benefits without working.

Ron Gettelfinger, the UAW president, said in Detroit that the union would also consider other modifications to contracts reached with General Motors, Ford Motor and Chrysler last year. Concessions were “the responsible thing to do”, he added.

The carmakers have been seeking to dismantle the job security measures, known as the Jobs Bank, for some time as a way of lowering their labour costs. Mr Gettelfinger faced questions about the practice from members of Congress during hearings two weeks ago.

Barack Obama, US president-elect, on Wednesday indicated that the Democratic party would look more favourably on the automaker’s latest request for emergency funding than it did on the ‘big three’s’ ill-fated pleas for $25bn in loans last month.

“It appears, based on reports that we have seen, that this time now the executives from these automakers are putting forward a more serious set of plans,” he said. In a reference to the company’s proposals to restructure, he added: “I’m glad that they recognise the expectations of Congress – certainly, my expectations – that we should maintain a viable auto industry.”

His comments follow remarks this week by Nancy Pelosi, House speaker, that bankruptcy was “not an option” for the carmakers.

The likelihood of federal aid for Detroit has also increased as the government has boosted its help for the financial sector – including the announcement of an $800bn loan programme last week – that has made it politically more difficult to give an outright refusal to the big three’s demands.

Indeed, Mr Obama hinted at greater flexibility among congressional Democrats, who had insisted that any loans to the car industry be granted from the $700bn fund established to buy toxic financial assets. Until now, Democratic leaders have ruled out the Bush administration’s rival proposal of using money from a $25bn programme already put in place to make the industry more energy efficient.

“With respect to Tarp [troubled assets relief programme] versus 136 [energy efficiency] money, at this point, I’m more interested in seeing whether or not there is a sound plan there,” Mr Obama said.

Separately, GM creditors, who are being asked to restructure their claims, are waiting to see whether Congress will give the struggling automaker long-term financial support.

GM is weighing whether it can persuade debtholders to swap their debt for equity in the company as it restructures. Since GM has said it could collapse by the end of the month without government help, much of its negotiating leverage is in the hands of lawmakers.
Copyright The Financial Times Limited 2008

[iam802]

No wonder these companies are not competitive. And they call this 'Capitalism' ?

[mocca_com]

GM, Chrysler Are Open to Merger If Part of Bailout
GM, CHRYSLER, FORD, BAILOUT, AUTO INDUSTRY, MERGER, U.S. ECONOMY, CONGRESS, NARDELLI, WAGONER, CEO,
Reuters | 04 Dec 2008 | 04:47 PM ET
General Motors and Chrysler said on Thursday they would be open to a merger if the U.S. government mandated it as a condition for providing the emergency financing they say is needed to allow them to survive into 2009.

GM Chief Executive Rick Wagoner and Chrysler Chief Executive Bob Nardelli were testifying at a U.S. Senate Banking Committee hearing held to consider a request for $34 billion in aid from Detroit's three automakers.


The comments appeared to revive the chances for a merger analysts have said would slash tens of thousands of U.S. auto jobs as a combined Chrysler-GM cut overlapping factories and headquarter operations in Detroit.

Nardelli said Chrysler's analysis showed that a merger between GM and Chrysler could reduce costs of the combined operations by between $8 billion and $10 billion.

Wagoner, who has asked for $18 billion in emergency government funding for GM, agreed that a merger with Chrysler presented an opportunity for "significant cost savings."

He said GM was willing to consider such a strategy if it were a condition for receiving federal funds.

"I would be very willing to look at it seriously," Wagoner said. "We are certainly willing to look at it and consider it very seriously."

'A Marriage That Makes Sense'

Sen. Robert Bennett, a Republican from Utah, endorsed a merger between GM and Chrysler as a step worth considering as the government weighs rescuing a key manufacturing sector.

"Everything I've seen suggests to me a merger between GM and Chrysler is a good idea," he told the hearing.


"It's a marriage that makes sense. All the work has been done. So it could be done," Bennett said. "Papers could be signed very quickly."

GM executives had talked to Chrysler's owner Cerberus Capital Management about an acquisition of Chrysler starting in September and continuing through October.

At one point, GM had requested $10 billion in public funding to support the rescue package, according to people familiar with the discussions.

The talks were shelved in late October, a move acknowledged by GM and then Chrysler in November. But, until Thursday's hearing, executives from both sides had not discussed the proposed merger publicly.


The disclosure was one of the standouts in over five hours of testimony before the Senate Banking Committee.

Wagoner, answering a question from Sen. Bob Corker, a Republican from Tennessee, confirmed GM's board had rejected the merger proposal as its own cash tightened.


"We did consider an acquisition. Two things happened during the process. One, the market dropped dramatically so our own funding needs increased more than we thought," Wagoner said. "As we discussed that with the board, they said we better make sure we have enough funding to take care of our own business."
Wagoner said GM was concerned that it would have run out of cash before the Chrysler merger could have been completed.

"We were concerned we didn't have the cash to make it until the deal could be closed and the financial institutions could not assure us they could provide that funding," Wagoner said.

However, Sen. Jon Tester, a Democrat from Montana, said he wanted assurance that government aid would not be used for a merger. Nardelli said he would agree to that if it were a condition of the assistance.

Nardelli came under fire at the hearing for seeking $7 billion in public funds even as Chrysler considered a sale or merger and Cerberus declined to inject more cash into the company.

Corker said he had spoken to a Cerberus board member on Wednesday who informed him that the private equity group was not willing to inject more money into the auto industry.

"You guys were getting ready to be bankrupt and all of a sudden GM is in trouble and they have clout, if you will, to come up here and ask for public money," Corker said. "All of a sudden there is life again. You might get $7 billion even though your portfolio parent won't inject any more cash."

"I have a little trouble with that," he said, adding that he also backed the idea of a GM-Chrysler merger.

GM says it needs the government to provide $4 billion by the end of the year and another $8 billion by March.

Nardelli said Chrysler could survive until the end of March with $4 billion in federal loans.

Copyright 2008 Reuters. Click for restrictions.
URL: http://www.cnbc.com/id/28057622/

[ucypmas]

The bailout talks have collapsed. Now its up to Bush whether he wants to do anything (via executive decision) to provide the US carmakers with short-term loans. He'll probably have to get Paulson to raid his TARP funds to fund this latest mess if he decides to act. If not...

It will be interesting to see how many CDSes blow up if they (and Chrysler) were to go into bankruptcy, which by definition a "credit event" in financial-speak. We might be in for another round of selling, if there's anything left to sell...

Your can read the developments here http://online.wsj.com/article/SB122903816924599853.html

[iam802]

This is a bet that GM will rally as Obama gets sworn in on Jan 2009.

With them tapping into the TARP funds and loans from the Canadian, a short term is viable.

I have an immediate support at 3.40 (S1) and a Strong support at 2.81 (S2). I'm using the word 'strong' here as it is unlikely that it will go below that within the next 1 month (since they have just got some loans).

Moving forward, we see big kumo resistant which suggest a long term play is not viable at this moment. Resistant R1 at $4.10 and R2 at 5.29 (<< I expect that it will touch, pierce through this level before it retreats).

[millionairemind]

GM Investors Bet U.S. Lifeline Isn’t Enough to Keep It Afloat
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By Greg Bensinger

Dec. 23 (Bloomberg) -- General Motors Corp. Chief Executive Officer Rick Wagoner said the biggest U.S. automaker got “what we asked for” with $9.4 billion in U.S. loans over the next 24 days. Investors bet that it’s not enough.

GM tumbled the most in more than a month yesterday in New York trading, while credit-default swaps on the company’s bonds jumped 2 percentage points in a sign of increasing concern that the Bush administration’s bailout may end in a default.

The stock-price slide all but erased the 23 percent gain on Dec. 19, when Detroit-based GM received a federal aid package to help it stay in business until March 31 while crafting a plan to shut plants, shed brands and reduce debt.

“It’s almost impossible for a management that invested in the assets, that hired the people, that put forth the strategy, to change so dramatically in such a short period of time,” Edward Altman, a New York University finance professor who created the Z-score formula to measure bankruptcy risk, said in a Bloomberg Television interview.

There is a “high” likelihood of a GM bankruptcy, Standard & Poor’s said yesterday in reducing the rating on the company’s unsecured debt to C, or 11 grades below investment quality. Robert Schulz, an S&P analyst in New York, said creditors can expect “negligible recovery” should the automaker default.

GM has slashed output and won union concessions since saying Nov. 7 it may run out of operating cash by year’s end. The automaker said it would need as much as $18 billion in aid or face a possible bankruptcy.

[sidney]

Idle list my goodness.

I would have to frown, hunch abit, speak softly and with great difficulty and labor ... walk to the clinic to convince doc before my company doc puts me on idle list ~ for a day only

[iam802]

General Motors Corporation Shares Surge After GMAC Won Status As Bank; Files Lawsuit Against A Bankrupt Auto-Parts Supplier-Reuters
Friday, 26 Dec 2008 04:01pm EST

Reuters reported that shares of General Motors Corp jumped after its auto finance affiliate GMAC won access to government lending programs. The Federal Reserve approved GMAC's status as a bank on Wednesday, giving the troubled finance company access to the Treasury-run financial bailout package, which may help GMAC avoid bankruptcy and continue financing of dealer and consumer loans for GM vehicles. GM filed a lawsuit on Wednesday against a bankrupt auto-parts supplier, saying it is holding necessary equipment hostage and that could potentially interrupt the launch of its new Chevrolet Camaro car.