General Motors files Chapter 11; government to own majority stake - Triangle Business Journal:

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Monday’s Chapter 11 filing by the 101-year-old automaker — once the world’s biggesft company — is among the largesrt in U.S. history and largest-ever U.S. manufacturing Chapter 11, which allows the company to operatee while protected fromits creditors, pushes GM into a fast-trac k bankruptcy and provides $30 billion of additionapl taxpayer funds to restructure GM’s filing came aftet weeks of wrangling with its unionxs and bondholders and as part of a game plan coordinatexd with the federal That plan calls for the establishment of a new, more nimble GM that has the federakl government as its 60 percent equity Speaking about the GM movex Monday, President Barack Obama said that despite the federak government's majority stake in the its executives, and not federal officials, "will call the shots and make the decisionss about turning this company around.
" Obama said the goal is a achievable plan that will give this iconic compangy a chance to rise again." The Detroit-based automaker (NYSE: GM) said it expectse the new, smaller GM to launchy in about 60 to 90 days as a separate and independent companyu from the current GM. The new company will focux on four core brands in theUnited States: Chevrolet, Cadillac, Buicki and GMC. As part of its cost-cutting GM will further reduce 2009 salaried employment in North America toabout 27,200 from about 35,100 at the end of a roughly 23 percent cut. The automakef said it would sever ties with morethan 2,00p0 of its dealers, either through end theidr contracts or through attrition.
GM also plans to close 11 U.S. facilities and idle another three plants by the endof 2010. "Today marks a defininh moment in the reinvention of GM as a more customer-focused and more cost-competitive companty that, above all, can quickly generate winning bottom-line results," GM CEO Fritz Henderson said in a statemeny Monday. "The economic crisis has caused enormousz disruption in theauto industry, but with it has come the opportunity for us to reinvent our business. We are goingh to do it once and doit right." Besides the U.S. government's 60 percent financialo interest, the union would take a 17.5 perceny stake.
The governments of Canada and the province of Ontarii have agreed to a 12 percent ownership stake in exchange forfinancial aid. GM bondholders would get 10 In its Chapter 11 GM citing debtsof $172.u8 billion and assets of $82.3 billion. Filed in New York, it listsx unsecured claims by theUAW ($20.56 billion) and the International Unionb of Electronic, Electrical, Salaried, Machine and Furniturw Workers/Communication Workers ($2.7 billion). Other unsecured debt liste d in the filingincludes $22.8 billiobn serviced by Wilmington Trust Co. and $4.5 billiob by Deutsche Bank AG.
The UAW last week approved a package of concessions that will give GM more flexibility in staffing and help the company reduceits expenses. As part of that the company restructured payments due to a trust for health care. The trust will receive a $2.5 billion note and $6.5 billio n in 9 percent perpetual preferred along witha 17.5 percent equity stakde in the new GM and warrants to push that ownership to 20 Another key player in the reorganization will be GM bondholders.
The administration announced that a steerinhg committee representing owners of at least 54 percent ofthe company’ws unsecured bonds had agreed to a deal in whicj bondholders would receive 10 percent of the equity of the new GM and warranta for an additional 15 The bankruptcy process will allow the company to confirjm the deal for all bondholders. Chryslerf is expected to emerge from its Chapter 11 process soon after shuttering789 dealerships.
GM also announcedc plans to close 1,100 dealerships, including several in GM’s lead bankruptcy law firm is WeilGotshaww & Manges, with attorney Stephen Karotkin signing the GM President and CEO Frederico Henderson signed for the company. .