Autoblog

Ex-car czar Rattner says Auto Task Force should have pushed for more cuts

Chris Shunk — Fri, 16 Dec 2011 14:45:00 EST

Filed under: Government/Legal, Chrysler, GM, UAW/Unions

The government's Auto Task Force was given the difficult task of saving General Motors and Chrysler at a time when the credit markets were frozen and the economy was in chaos. The team ultimately got the job done by ushering the two iconic companies through extraordinarily short bankruptcies.

Former car czar Steven Rattner headed the Task Force through those tough times, and though he characterizes the bailouts as a success, he feels the United Auto Workers could have given more. The Detroit News reports that Rattner told the Detroit Economic Club that the Task Force should have insisted on UAW wage cuts. Rattner added that the wages of UAW workers is still higher than that of the foreign competition.

Rattner also pointed out that bondholders weren't asked to sacrifice enough, adding that a traditional bankruptcy would have meant that those investors would have likely lost everything.

In total, the U.S. government spent $82 billion in taxpayer money to bailout GM and Chrysler. That's a whole heap of coin, and the U.S. government estimates that it will lose $14 billion when all of its GM shares are sold. Even so, Rattner estimates that the bailout saved "millions" of manufacturing jobs.

Ex-car czar Rattner says Auto Task Force should have pushed for more cuts originally appeared on Autoblog on Fri, 16 Dec 2011 14:45:00 EST. Please see our terms for use of feeds.

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Judge tosses out suit by Delphi pensioners against Treasury

Zach Bowman — Tue, 06 Sep 2011 14:01:00 EST

Filed under: Government/Legal

The Detroit News is reporting that a federal judge has thrown out a portion of the lawsuit brought against the federal government by Delphi retirees. The former employees of the automotive supplier brought suit against the federal government after their pensions were terminated in bankruptcy proceedings. U.S. District Judge Arthur Tarnow dismissed claims against the U.S. Treasury Department, Timothy Geithner, the auto task force, Steven Rattner and Ron Bloom, though the judge did allow the lawsuit to continue against the Pension Benefit Guaranty Corporation. The Pension Benefit Guaranty Corporation serves as the federal government's pension insurer.

Delphi Corporation walked away from pensions covering around 70,000 people during the company's bankruptcy proceedings in 2009. The Detroit News reports that those pensions were underfunded by around $7 million and that the Pension Benefit Guaranty Corporation took responsibility for $6.1 million of the deficit. That marks the largest loss in the institution's history. Even so, some pensioners may lose as much as 65 percent of their benefits, including life and health insurance.

Judge tosses out suit by Delphi pensioners against Treasury originally appeared on Autoblog on Tue, 06 Sep 2011 14:01:00 EST. Please see our terms for use of feeds.

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Report: 'Car Czar' post nixed as part of federal budget deal

Chris Shunk — Tue, 12 Apr 2011 14:26:00 EST

Filed under: Etc., Government/Legal, Earnings/Financials

Last week, the government avoided a costly shutdown by cutting $38 billion from the 2012 federal budget. The American people are just now hearing what those cuts consist of, and it appears the auto industry and industry regulation have been affected.

The Detroit News is reporting that the currently vacant Car Czar posts was among the positions that didn't make the cut. The post was last held by Ron Bloom (above), Senior Adviser to the Secretary of the Treasury, who left the job in February. The Car Czar was originally appointed to oversee the government's investment in the industry in the wake of the bankruptcies of General Motors and Chrysler.

We're guessing the task force position won't be missed much by the auto industry, but a $408 million cut from a $ 2.3 billion program to research fuel efficiency technology might be. Also getting the axe? A whopping $2.9 billion from light rail initiatives and $37 million from a program that advocates seatbelt usage.

[Source: The Detroit News]

Report: 'Car Czar' post nixed as part of federal budget deal originally appeared on Autoblog on Tue, 12 Apr 2011 14:26:00 EST. Please see our terms for use of feeds.

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Report: Ex-car czar Rattner nears SEC settlement

Zach Bowman — Thu, 14 Oct 2010 11:01:00 EST

Filed under: Government/Legal

According to Reuters, the Securities and Exchange Commission is set to settle with the former head of the Obama Administration's auto task force, Steven Rattner. Earlier this year, the SEC charged Rattner with participating in a pay-to-play pension program, but the commission is expected to announce today that the former car czar has agreed to pay a fine of more than $5 million and accept a multi-year ban from the securities industry.

New York Attorney General Andrew Cuomo has led an investigation into fraud surrounding the state's $132 billion pension fund that has resulted in seven guilty pleas. One of those pleas came from the former New York comptroller Alan Hevesi, who was charged with corruption.

Rattner, meanwhile, has been charged with unscrupulous activities associated with Quadrangle, LLC - a private equity fund he co-founded in 2000. The SEC alleges that the investment group gave kickbacks to officials if they directed state pension money into the fund. Since then, Quadrangle has agreed to pay $12 million in fines associated with that scheme. Rattner, meanwhile, missed out on those proceedings because he no longer worked for the fund at the time.

[Sources: Reuters, CNN Money | Image: Neilson Barnard/Getty for Fortune Magazine]

Report: Ex-car czar Rattner nears SEC settlement originally appeared on Autoblog on Thu, 14 Oct 2010 11:01:00 EST. Please see our terms for use of feeds.

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Report: TARP audit criticizes Obama task force for dealer closings

Chris Shunk — Mon, 19 Jul 2010 10:59:00 EST

Filed under: Government/Legal, Chrysler, GM

General Motors and Chrysler terminated the contracts of thousands of dealers while the automakers were in bankruptcy proceedings; a move that was required by the Obama Administration's auto task force as a condition of bankruptcy. The scheme was heralded as a way to save the struggling automakers millions or even billions of dollars, but special inspector general for the Troubled Asset Relief Program (TARP) Neil Barofsky claims in an audit that the dealer closings weren't "necessarily critical to the manufacturers' viability." Barofsky added in his TARP audit that the closing of dealerships would add thousands of workers to the unemployment lines "without sufficient consideration of the decisions' broader economic impact."

The U.S. Treasury, obviously, doesn't agree with Barofsky's assessment. The Detroit Free Press quotes an anonymous source who points out that it was well known in the auto industry that Detroit automakers have too many dealers. Toyota, for instance, has a much smaller dealer body than GM. And the dealers Toyota does have average much higher sales volumes than dealers of domestic products. That theoretically leads to dealers with more marketing muscle in their perspective markets. Not all automaker executives wanted to shrink their dealer networks, either. Some feared the loss of sales that would follow shutting down retail outlets, but the task force reportedly felt those lost sales would be recouped within a few years

But while arguments can be made for or against shrinking the pool of retail outlets around the country, one fact is hard to ignore. A reported 35,000 dealer employees lost their jobs in 2009 and 2010, or over three percent of all dealership employees around the country - roughly equal to the 32,000 jobs lost within the industry.

Barofsky also touched on the process which both Chrysler and GM used to determine which dealers should stay and which should go. The auditor claimed that Chrysler stuck to its plan throughout, which is evidenced by the fact that only 28 dealers won their arbitration cases out of 789 stores that were closed last year. Barofsky claims that GM wasn't so strict in determining which dealers to cut, and there wasn't much documentation to show how and why the General cut its dealers. GM has since restated 666 of the 1,454 dealers it cut, though the company gave dealers more than a year to wind down operations, while Team Pentastar cut off its under-performing dealerships almost immediately.

[Source: Detroit Free Press | Image: AP/Jeff Roberson]

Report: TARP audit criticizes Obama task force for dealer closings originally appeared on Autoblog on Mon, 19 Jul 2010 10:59:00 EST. Please see our terms for use of feeds.

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Former Car Czar impressed with progress of GM, Chrysler

Jonathon Ramsey — Wed, 12 May 2010 17:31:00 EST

Filed under: Government/Legal, Chrysler, GM, Earnings/Financials

Steven Rattner, the man who headed the Auto Task Force, saved Michigan from bankruptcy, shepherded the still-contentious resurrections of General Motors and Chrysler and will soon have a book on his time in the trenches, has said his little lambs are doing better than he expected they would a year ago. Not only are they outstripping the targets set for them, but he thinks the government could get $40 billion of the $50 billion it threw at GM last year.

Ratter wouldn't be surprised if GM posts a profit this quarter, but that assessment is "based on public statements by GM executives," and it's probably better to wait for the slightly harder fact of the bottom line than to expect some gravy. More solid might be Rattner's belief, based on the price of old GM's bonds, that the government could get back $40 billion of the $50 billion it threw at the company last year, once GM begins selling stock.

[Source: Automotive News - Sub. Req'd | Image: Neilson Barnard/Getty]

Former Car Czar impressed with progress of GM, Chrysler originally appeared on Autoblog on Wed, 12 May 2010 17:31:00 EST. Please see our terms for use of feeds.

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Report: GM to make another $1B loan repayment

Chris Shunk — Fri, 26 Mar 2010 08:30:00 EST

Filed under: Government/Legal, GM

Last December General Motors began repaying its debt to the U.S. government by making a $1 billion payment to its U.S. debtors and another $192 million to Canada. Company CEO Ed Whitacre promised that the payments would keep coming every quarter until the loan was paid off in June, 2010, and with the first quarter of 2010 coming to a close, The General is about due for another payment. Keeping with Big Ed's word, the company issued a statement on Thursday that the next installment of another billion dollars will be paid on March 31.

The brief statement is attributed to Whitacre and promises another $1 billion in cold, hard cash to the U.S. government and an additional $192 million to Canada. In the statement Whitacre sounds confident that the loans will soon be paid in full, adding "GM has every confidence that the remainder of the loans will be paid in full by June 2010; five years ahead of schedule."

On April 1 The General will have shaved $2 billion off its debts with another $4.7 billion to go. We're no math experts, but we're guessing $1 billion per quarter is going to have to be substantially increased over the next three months to repay its debt in full by June 30. But with about $40 billion in the bank, GM will likely have the cash on hand to pay off Uncle Sam by the time Summer is in full swing.

Once GM does pay off its $6.7 billion loan, the feds will still own 61% of the Detroit, MI-based automaker, but with some analysts expecting GM to take its stocks public in the next few months, the automaker could soon be a fully public company again. We're sure GM executives will be very happy when that happens. Hit the jump to read GM's brief press release.

[Source: Detroit Free Press | Image: Bill Pugliano/Getty]

Continue reading Report: GM to make another $1B loan repayment

Report: GM to make another $1B loan repayment originally appeared on Autoblog on Fri, 26 Mar 2010 08:30:00 EST. Please see our terms for use of feeds.

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GM begins repayment to U.S. and Canadian governments

Chris Shunk — Fri, 18 Dec 2009 17:30:00 EST

Filed under: Government/Legal, GM

Good news, the check is in the mail! General Motors issued a (very) brief press release this afternoon stating that the automaker had delivered on its promise to issue its first reimbursement checks to the U.S. and Canadian governments by the end of the year. GM sent $1 billion to the feds and $192 million to the Canadian government, and GM reiterated in the statement that it would complete payments totaling $6.7 billion (to the U.S. government) by June 2010.

Beyond the $6.7 billion GM owes the federal government is a 60 percent ownership stake Uncle Sam has on the 101-year-old automaker. When the General releases an initial public offering the resulting stock sale will (supposedly) buy the government out. Experts feel the IPO could happen as early as the second half of 2010. Hit the jump to read over the General's succinct press release.

[Source: GM | Image: Bill Pugliano/Getty]

Continue reading GM begins repayment to U.S. and Canadian governments

GM begins repayment to U.S. and Canadian governments originally appeared on Autoblog on Fri, 18 Dec 2009 17:30:00 EST. Please see our terms for use of feeds.

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REPORT: Fed predicts it will lose $30B on auto industry bailout

Chris Shunk — Thu, 10 Dec 2009 13:27:00 EST

Filed under: Government/Legal, Chrysler, GM, Earnings/Financials

2009 isn't quite over yet, but we're pretty sure most automakers would rather forget that it ever happened. And while General Motors and Chrysler suffered the pain and humiliation of bankruptcy and workers lost thousands of jobs and many plants and dealerships closed, the good news is that the General and the Pentastar are now more fiscally healthy than they've been in ages. The bad news is that it cost U.S. taxpayers an estimated $82 billion to save what has been called hundreds of thousands of jobs.

The Detroit News is reporting that after wading through the wreckage of the auto bailout, the Obama Administration only expects to get back an estimated $52 billion of its original investment. That's horrible news, right? Not so, says Gene Sperling, the senior counsel to Treasury Secretary Timothy Geithner. He said the $30 billion estimate is better than the $44 billion the government thought it would lose a few months ago. And with the perceived stabilization of the auto industry, Sperling feels the numbers could improve.

The DetNews reports that President Obama stressed during a speech on the economy that while the bailout of the auto industry wasn't politically popular, it was absolutely necessary to save "hundreds of thousands of jobs." The president then added "these were not decisions that were popular or satisfying; these were decisions that were necessary."

There are signs that at least GM will start paying the government back $6.7 billion as early as the end of the year. Chairman and interim CEO Ed Whitacre has reportedly intimated that the company could pay the money back in one lump sum. And once the auto industry is in a little better shape, the government could recoup much more cash when the General goes public. For the moment, though, Uncle Sam (e.g. the U.S. taxpayers) still owns 61 percent of the new GM.

[Source: The Detroit News | Image: Saul Loeb/AFP/Getty]

REPORT: Fed predicts it will lose $30B on auto industry bailout originally appeared on Autoblog on Thu, 10 Dec 2009 13:27:00 EST. Please see our terms for use of feeds.

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Government reportedly encouraged by Fiat's plan for Chrysler, sees "huge sense of urgency"

Chris Shunk — Thu, 19 Nov 2009 08:58:00 EST

Filed under: Government/Legal, Chrysler, Fiat

Two weeks ago Fiat and Chrysler unleashed an ambitious five-year plan to return Detroit's number three automaker to financial and product health. The plan called for 14 all-new models based mostly on Fiat platforms and ten more vehicles which will receive much-needed attention. While Senator John McCain isn't so sure Chrysler will survive the next few years, Obama Auto Task Force Chief Ron Bloom likes what he sees.

Automotive News is reporting that Bloom says the Pentastar plan shows "a huge sense of urgency. We see a huge dedication and commitment, working extremely hard." Bloom also added that he agrees with CEO Sergio Marchionne when he said that team Pentastar has their work cut out for them.

Considering that the US government spent billions bailing out Chrysler, Bloom's confidence means a lot. But while the government saved Chrysler, the United Auto Workers is the company's biggest shareholder. The union currently owns 55% of the new Chrysler, and that won't change until the Auburn Hills, MI-based automaker goes public and pays off its pension obligations. Marchionne has said that the public move could come as early as 2011, but Bloom says that time line could be premature. Either way, we're sure Chrysler will go public at the earliest possible time, but that time won't come until the stock-buying public sees some new products coming from Auburn Hills via Italy.

[Source: Automotive News - Sub. Req. | Image Source: Bill Pugliano/Getty]

Government reportedly encouraged by Fiat's plan for Chrysler, sees "huge sense of urgency" originally appeared on Autoblog on Thu, 19 Nov 2009 08:58:00 EST. Please see our terms for use of feeds.

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REPORT: GM's CFO Ray Young likely to resign

Chris Shunk — Wed, 09 Sep 2009 18:01:00 EST

Filed under: Government/Legal, GM

The last two chief financial officers at General Motors, Rick Wagoner and Fritz Henderson, eventually became CEO. Ray Young, who has been CFO at the General for less than a year and a half, likely won't make it to the top. The Detroit News reports that Young is going to resign his post as CFO in the weeks ahead, and he may be only one of a few departures among senior GM brass.

The new GM board is meeting today to discuss and evaluate top management at the General, and Detroit News' sources say that Young, the GM finance department and President Obama's auto Task Force clashed on a few occasions during bankruptcy proceedings. The DN points out one instance when, in a June 2 press conference, Young said that the company would not disclose financial info post bankruptcy, as it would in effect be a private company. Predictably, that didn't play well with the public tax payers who in effect bailed out the embattled automaker. The next day, GM announced that it would give regular updates on its financial status.

Some are speculating that CEO Fritz Henderson will also be under the microscope during the Wednesday board review. In August, Bloomberg reported that Obama Task Force lead Ron Bloom reportedly gave Henderson a 60% chance of leading a GM turnaround, which isn't exactly a vote of confidence. We're guessing that it wouldn't look good for the Task Force or the new GM board to ditch another CEO just five months after getting rid of Wagoner, though, so removing the fledgling CEO is probably unlikely at this point.

[Source: Detroit News | Image Source: Stan Honda/AFP/Getty]

REPORT: GM's CFO Ray Young likely to resign originally appeared on Autoblog on Wed, 09 Sep 2009 18:01:00 EST. Please see our terms for use of feeds.

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REPORT: Government ends warranty programs for GM, Chrysler

Chris Shunk — Wed, 22 Jul 2009 17:58:00 EST

Filed under: Government/Legal, Chrysler

On March 30, President Obama announced that the federal government would back the warranties of General Motors and Chrysler in the event of bankruptcy. When the president says the word "backing," he means cold, hard cash, and in this case the total was $641 million. But with both companies out of bankruptcy court and flush with the government cash needed to run their businesses, it is apparently time to pay the money back.

Automotive News is reporting that new Auto Task Force head Ron Bloom informed a House Judiciary subcommittee that the government would no longer be backing the warranties of GM and Chrysler, adding "consumers can now feel assured that the companies have the financial wherewithal to meet their warranty commitments on a continuing basis."

GM and Chrysler have reportedly returned the $641 million, with interest. GM told Automotive News that it didn't use any of the funds, while Chrysler declined to comment on warranty matters as a matter of company policy.

[Source: Automotive News - Sub. Req. | Image: Justin Sullivan/Getty]

REPORT: Government ends warranty programs for GM, Chrysler originally appeared on Autoblog on Wed, 22 Jul 2009 17:58:00 EST. Please see our terms for use of feeds.

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BREAKING: Rattner reportedly quitting post as head of Auto Task Force

Jeremy Korzeniewski — Mon, 13 Jul 2009 17:28:00 EST

Filed under: Government/Legal, Hirings/Firings/Layoffs

Steve Rattner, the former Wall Street executive who was tapped by the Obama Administration run point for the Auto Task Force, is reportedly stepping down after five months on the job. According to a statement from Treasury Secretary Timothy Geithner, Rattner (above, far right) will now "transition back to private life and his family in New York City." He added, "I hope that he takes another opportunity to bring his unique skills to government service in the future."

With Chrysler and General Motors recent emergence from bankruptcy, now is probably as good a time as any to transition to new Task Force leadership. Taking over for Rattner will be Ron Bloom, a former advisor to the United Steel Workers union. Bloom's main focus will reportedly be to "[protect] the substantial investment the American taxpayers have made in GM, Chrysler and GMAC."

[Source: The Detroit News | Image: Chip Somodevilla/Getty]

BREAKING: Rattner reportedly quitting post as head of Auto Task Force originally appeared on Autoblog on Mon, 13 Jul 2009 17:28:00 EST. Please see our terms for use of feeds.

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REPORT: Federal bankruptcy court expected to rule on "New GM"

Chris Paukert — Tue, 30 Jun 2009 10:57:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

According to Reuters, General Motors is on its way into bankruptcy court today in an effort to win approval and access to additional federal funding under its asset-split plan. The automaker filed for Chapter 11 protection just 30 days ago, but it will now go before Judge Robert Gerber to sell desirable assets (think: Chevrolet, Cadillac, GMC, Buick) to "New GM" and jettison various debts and negative assets by consigning them to "Old GM," which would be liquidated. If it succeeds in winning court approval, GM will receive billions in U.S. Treasury funding.

Before it can open the Fed's piggy bank, however, GM must weather challenges from bondholders and disgruntled consumers involved in certain types of product liability lawsuits. Industry watchdogs believe that both GM and the Obama administrations auto task force have learned from Chrysler's bankruptcy machinations, which could accelerate the process. For more details on today's proceedings, check out the link below. Thanks for the tip, Michael!

[Source: Reuters via Yahoo | Image: Michael Heiman/Getty]

REPORT: Federal bankruptcy court expected to rule on "New GM" originally appeared on Autoblog on Tue, 30 Jun 2009 10:57:00 EST. Please see our terms for use of feeds.

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Auto Task Force says no more money for auto bailouts... probably

Chris Shunk — Thu, 11 Jun 2009 19:03:00 EST

Filed under: Government/Legal, Chrysler, GM

To date, the U.S. government has reportedly given General Motors, Chrysler, their financial institutions and various industry suppliers about $80 billion in taxpayer money, and Congress wants to know when we're going to get that money back. The Senate Banking, Housing and Urban Affairs Committee held a hearing with the Auto Task Force for the first time to discuss the state of the government loans, as well as whether or not taxpayers will ever be paid back.

According to task force senior adviser Ron Bloom, there is "a reasonable probability" that some or all of the money will be paid back, but he was by no means "highly confident" that the money would be returned to taxpayers. He does, though, see "reasonable scenarios where taxpayers get their money back."

Bloom was a bit more certain, however, about the prospects of the auto industry receiving still more money from the government. Bloom said that it was the Obama administration's "absolute intent" not to provide future funding to the bailed out automakers, but he followed that with "never say never." That's far from a guarantee, but it would appear that more money doesn't seem to be in the plans.

During his testimony, Bloom also reiterated that the administration was a "reluctant shareholder" in the automakers, and that the government intends to get out the car business as soon as possible. When Alabama senator Richard Shelby (R) pressed for a timeline for the government to exit GM ownership, Bloom admitted that there was "no specific target" set.

[Source: The Associated Press via MSNBC | Image: Chip Somodevilla/Getty]

Auto Task Force says no more money for auto bailouts... probably originally appeared on Autoblog on Thu, 11 Jun 2009 19:03:00 EST. Please see our terms for use of feeds.

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Unlikely Ally: Ralph Nader addresses Capitol Hill over likely GM bankruptcy

John Neff — Tue, 19 May 2009 15:28:00 EST

Filed under: Government/Legal, GM

Ralph Nader, the man who single-handedly sank the Chevrolet Corvair by exposing its safety faults in his book Unsafe At Any Speed, has unexpectedly appeared at the side of General Motors. In a letter written to Senator Chris Dodd, Chair of the U.S. Senate Committee on Banking, Housing and Urban Affairs, and Barney Frank, Chair of the House Committee on Financial Services, Nader warns the Congressmen about the risk of leaving GM's fate in the hands of the Auto Task Force, or what he calls "a small unelected and largely unaccountable group arranged to avoid the Federal Advisory Committee Act."

In truth, Nader is not necessarily sticking up for GM, but as a consumer advocate he's more interested in protecting tax-payers and the thousands -- if not millions -- of families that could be harmed if the Auto Task Force makes a misstep on its march towards an increasingly likely GM bankruptcy. His solution? Get Congress involved through more oversight of the Auto Task Force's decisions and urge the administration to postpone any irreversible decisions until they can be carefully reviewed in Congressional hearings. Of course, this delay would mean that GM needs more bridge loans to survive the interim, but as Nader reminds us, "the virtually condition-free Wall Street" bailout has cost much more. Follow the jump to read Nader's letter for yourself in its entirety.

[Source: Nader.org | Photo Source: Brendan Smialowski/Getty]

Continue reading Unlikely Ally: Ralph Nader addresses Capitol Hill over likely GM bankruptcy

Unlikely Ally: Ralph Nader addresses Capitol Hill over likely GM bankruptcy originally appeared on Autoblog on Tue, 19 May 2009 15:28:00 EST. Please see our terms for use of feeds.

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GM reportedly accelerating the closure of 1,700 dealers

Jonathon Ramsey — Thu, 16 Apr 2009 10:58:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

June 1, 2009 is turning into the equivalent of General Motors' D-Day, and every day seems to bring new events that are being planned in advance of it. GM had more than 6,000 dealerships at the end of last year, and in the initial viability plan it offered to the government, the automaker pledged to close 25% of those over the next five years. As with the rest of the plan, the Auto Task Force said "That isn't enough."

So GM has turned the big guns on its dealership closures, having seen 200 of them shut down this year already. It is not waiting for attrition to rid itself of others, but pin-pointing under-performing locations and "could move to terminate franchise agreements." And GM is doing so with a different payment scale than it had when it closed down the 2,800 Oldsmobile dealerships, which ran up a tab of $1 billion.

Also, it appears, the bell tolls louder for a GM bankruptcy. Tucked in the article was this line: "The issue of how many U.S. dealerships GM can support has been one of the hot-button issues for U.S. officials as they drive GM toward a stepped-up restructuring that many observers have now concluded will include a bankruptcy filing."

[Source: Yahoo!]

GM reportedly accelerating the closure of 1,700 dealers originally appeared on Autoblog on Thu, 16 Apr 2009 10:58:00 EST. Please see our terms for use of feeds.

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GM chairman Kresa admits: "Time is not on our side on trying to get things done out of bankruptcy"

Jonathon Ramsey — Tue, 14 Apr 2009 18:26:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

If General Motors' saga were a play by Aeschylus, today marks the day when Kent Kresa, GM's interim chairman, returns from a visit to the Oracle at Delphi and informs everyone that the signs are not auspicious. There's been much talk of the bondholder issues that GM faces, and the news today is that the deadline for the debt-for-equity transaction isn't June 1 -- it's this Friday. That's when a bondholder agreement would need to be in place so GM would have everything sorted before its upcoming bond payment is due.

That time-line caused Kresa to say "We have some deadlines rapidly approaching and the probabilities are decreasing we can do outside of bankruptcy." We were fairly sure GM couldn't get a deal done when they had until June 1 merely to get signatures on agreements. If GM has to have everything in place by Friday, and the bondholders as of Tuesday hadn't issued a response to the General's latest offer, then it looks like the Auto Task Force will instruct everyone to, "Please open your books to Chapter 11."

[Source: Wall Street Journal | Image: Bill Pugliano/Getty]

GM chairman Kresa admits: "Time is not on our side on trying to get things done out of bankruptcy" originally appeared on Autoblog on Tue, 14 Apr 2009 18:26:00 EST. Please see our terms for use of feeds.

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GM chairman looking to turn over half of board of trustees by June?

Jonathon Ramsey — Tue, 14 Apr 2009 16:20:00 EST

Filed under: Trends, Government/Legal, Hirings/Firings/Layoffs, GM

According to the Detroit Free Press, General Motors interim chairman, Kent Kresa, has been asked by president Obama's administration to replenish the automaker's board with fresh blood. Kresa said that while the board did achieve "historic things" recently, like renegotiating the UAW pay scale, he also said that the board didn't fully comprehend the magnitude of the downturn.

As it did in asking Rick Wagoner to step down, perhaps the White House Auto Task Force views GM's board as too steeped in the way things used to be. They are, after all, the same folks who backed Wagoner fully not even a year ago. Kresa is interviewing potential board members with an eye to replacing six people, which would be half of the current board, by June.

[Source: The Detroit Free Press | Image: Getty/Jeff Haynes]

GM chairman looking to turn over half of board of trustees by June? originally appeared on Autoblog on Tue, 14 Apr 2009 16:20:00 EST. Please see our terms for use of feeds.

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GM's new offer for bondholders may contain no cash, just equity

Jonathon Ramsey — Sun, 12 Apr 2009 10:01:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

GM's most recent offer to its bondholders offered a little bit of cash and a little bit of equity. GM CEO Fritz Henderson's example was that a holder of $1,000 in bonds would end up with $333 and a some equity. After conferring with the Auto Task Force, however, that offer was deemed excessive in light of GM's situation so a new deal is being readied for bondholder approval.

In Henderson's words, "That equity is part of the offer." What he might actually mean is that equity is the offer. CNBC reports that the "Treasury Department wants GM to offer its bondholders a small amount of its stock in exchange for their $29 billion of GM debt."

Having turned down much better offers, we don't expect bondholders to signal approval now. From the outside this looks to be a showdown: GM has appeared to accept the prospect of bankruptcy, and while it wants to tend to business out of court, it will enter a pre-packaged Chapter 11 if necessary; bondholders appear to be looking at The General as if it's got a gun to its head, and they're waiting to see what happens when the trigger gets pulled. We don't have much longer to wait...

[Source: CNBC]

GM's new offer for bondholders may contain no cash, just equity originally appeared on Autoblog on Sun, 12 Apr 2009 10:01:00 EST. Please see our terms for use of feeds.

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