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“Playboy” to “Leader” – New CEO Akerson at GM

Fourth GM CEO in two years brings very different style to job.

by on Sep.01, 2010

After joining the GM Board following its 2009 bankruptcy, Dan Akerson takes over, today, as its new CEO.

Those who work on the 38th floor of Detroit’s Renaissance Center can be forgiven for feeling like the revolving door has been stuck in overdrive.  The senior management offices for General Motors have seen a steady stream of new faces since the beginning of 2009, virtually every top position having changed – at least once – since the giant automaker began sliding towards bankruptcy.

But nowhere has that change been more apparent – or frequent – than in the top spot, where long-time chief executive Rick Wagoner was fired by the Obama Administration, in March 2009, as part of its $50 billion bailout of the troubled carmaker.  Today, the fourth CEO in barely two years takes the reigns from Ed Whitacre, the lanky Texan and former AT&T Chairman, who announced his sudden departure last month after laying out the plans for GM’s upcoming IPO.

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The new CEO is, to some, an unlikely figure to be running the car company.  A graduate of the U.S. Naval Academy, Dan Akerson is not your classic car guy.  In fact, he’s had no experience at all with the auto industry other than overseeing several companies linked to the car business when Akerson served as managing director of the powerful private equity firm, The Carlyle Group.

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GM Plans IPO Stock Sale By Bankruptcy Birthday

General Motors Company plans to go public again in July 2010, about a year after emerging from bankruptcy protection.

by on Aug.10, 2009

GM Renaissance Center

How to value the new shares?

Late Friday in an SEC filing, General Motors Company said that it will make its initial public offering of stock by July 10 of next year, or one year after its emergence from bankruptcy protection by a Federal Court in New York. In the interim CEO Fritz Henderson is being paid $105,000 a month starting back in January of 2009.

The filing contained no financial results for the second quarter, and the company said they would not be provided until after the third quarter of this year.

Sales declined 19% in the U.S. in July and, with the exception of Asia, GM is struggling to hold marketshare globally. How the company is performing is critical to the valuation of the shares issued, but the lack of public financial data that conforms to generally accepted accounting principles will make an assessment difficult for outsiders. GM is a private company and therefore not subject to the same filing requirements as publicly held companies under the Securities Exchange Act of 1934.

“Today’s disclosures are consistent with our commitment to remain transparent and to keep the public informed of our progress,” said Fritz Henderson, GM president and CEO in a statement.

The company will continue to file “certain information” with the SEC about material business matters, as well as provide certain disclosures about the company’s financial status and key indicators of the company’s progress.

The company is now authorized to issue 2.5 billion shares of common stock, an order of magnitude higher than the old number of common shares outstanding, which finished trading at less than $1 per share.

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GM, Ford Could Soon Be Profitable

Auto Task Force Chief Ron Bloom is looking for big payback to U.S. taxpayers on their GM stock.

by on Aug.05, 2009

The government wants to sell off its GM stake ASAP, but setting a hard timeline would be counter-productive, according to Auto Task Force Director Ron Bloom.

The government wants to sell off its GM stake, but setting a timeline would be counter-productive, according to Auto Task Force Director Ron Bloom, who foresees a big taxpayer payback.

On balance the federal bailout of the U.S. auto industry has been good not only for carmakers but also the U.S. economy, say several key industry experts.

Rod Lache, top automotive analyst for Deutsche Bank, said that the private sector’s general approval of the GM and Chrysler bailouts has been signaled by the increase in the value of certain auto stocks.  The restructuring of the auto industry not only has given General Motors and Chrysler a new lease on life, but also could lead to Ford Motor Co. becoming profitable again by the end of 2009.  And its is quite likely that GM will be profitable in 2011, Lache told a crowd of industry leaders at the annual Management Briefing Seminars, in Traverse City, Michigan.

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Meanwhile, the head of the Presidential Auto Task Force that bailed out GM and Chrysler reiterated that the federal government will not be involved in the day-to-day operations of either company. The government wasn’t involved in the decision on whether Bob Lutz should stay on at GM as vice chairman, said task force boss Ron Bloom. That, along with other personnel changes that have followed the company’s emergence from bankruptcy, were all left strictly in the hand of GM’s management, said Bloom, a former official with the United Steel Workers and a successful investment banker.

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Steven Rattner Leaves U.S. Treasury as Ron Bloom Takes over the President’s Auto Task Force

The first high level defection from the Obama Administration comes as the president is due to visit Michigan tomorrow.

by on Jul.13, 2009

Will auto task force, led by Steve Rattner, agree with GOP that bankruptcy is Detroit's best option?

Rattner was instrumental in orchestrating the bankruptcies and subsequent taxpayer financed restructurings of Chrysler and General Motors.

Steven Rattner, the head of the Presidents’ Auto Task Force, has resigned, according to a statement just issued by Tim Geithner, Secretary of the U.S. Treasury.

Taking over as the head of the Task Force is Ron Bloom a former employee of the United Steel Workers Union, who also was deeply involved in the auto bailouts that cost U.S. taxpayers more than $60 billion thus far.

“With GM’s restructuring complete, Steven Rattner, whose leadership and vision were invaluable to the Auto Task Force’s efforts, has decided to transition back to private life and his family in New York City,” said Geithner.

Rattner’s New York banking and financial services background might also be a factor in the resignation. Rattner was one of the founders of the private-equity firm Quadrangle Group LLC. Rattner himself is now under investigation for bribing New York politicians to secure lucrative pension fund management contracts for his old firm.

Rattner joined Treasury last February and was instrumental in orchestrating the bankruptcies and subsequent restructurings of Chrysler and General Motors, both of which occurred at unprecedented speeds.

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Judge Okays General Motors’ “363 Sale”

Automaker set to emerge as "new GM, perhaps by July 10.

by on Jul.06, 2009

Ed Whitacre, Jr., could formally assume the chairman's post at the "new" GM as early as July 10th.

Ed Whitacre, Jr., could formally assume the chairman's post at the "new" GM as early as this coming Friday, July 10th.

A “new” General Motors seems likely to emerge from the ashes of bankruptcy by the end of the week, now that a federal bankruptcy judge has given the automaker the go-ahead for a so-called “363 Sale.” The order approving the sale came with an automatic 4-day stay, which would give time for appeals to be filed.

The sale process allows the automaker to transfer its good assets to an all-new company. That includes dozens of assembly and parts plants that will turn out product for the four remaining North American brands. The bad assets, including dozens of plants now closed or slated for closure, will be kept as part of the old GM, which will eventually settle claims against the company for pennies on the dollar.

The new GM will be markedly smaller than the company that existed prior to bankruptcy. Its North American workforce, once numbering close to 1 million, will fall to around 64,000, although the low number does not take into account GM workers previously transferred to Delphi, which is also in bankruptcy. Of eight North American marques, half will survive: Chevrolet, Cadillac, Buick and GMC.  GM’s market share hit 20.3% in June. And the new GM Company wants to hold share to at least 18.5%, the break-even point at the current market volume of under 10 million units annually, once its downsizing has been completed.

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“This has been an especially challenging period, and we’ve had to make very difficult decisions to address some of the issues that have plagued our business for decades,” said General Motors CEO Fritz Henderson in a statement released today. “Now it’s our responsibility to fix this business and place the company on a clear path to success without delay.”

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Auto Task Force Busy Behind Scenes as Lear Corporation Teeters on the Edge of Bankruptcy

So far the Task Force is not being very successful at actually exiting the auto business as promised.

by on Jun.30, 2009

Lear Headquarters, Southfield, Michigan

In 2008, Lear Corporation ranked at number 157 among the Fortune 500.

While Lear Corporation, one of the nation’s largest automotive suppliers, is on the edge of bankruptcy, the Obama Administration’s Automotive Task Force appears to be actively lining up support from the private sector to help auto suppliers.

Following the Task Force’s rather blatant intervention over the weekend in the GM bankruptcy, the Task Force appears to be working behind the scenes to secure private money for parts suppliers after it refused further taxpayer support earlier this month, said one Detroit area consultant who asked not to be identified.

Lear, according to at least one report, is in line for $500 million worth of debtor in possession financing that was virtually unavailable at any price only 60 days ago.

Financial center blogs also speculated that the Task Force helped TRW renegotiate key covenants with key suppliers.

Meagan Hardcastle, a director and turnaround specialist for O’Keefe & Associates in Bloomfield Hills, said all kinds of suppliers are facing financial issues right now.

“We got huge liquidity problems in the supply base right now. We think several big suppliers are going to file for Chapter 11 protection,” she said.

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Senate Banking Hearing Second Guesses Auto Task Force. Wants to Know What the Exit Strategy Is?

Obama Administration is under attack for its deficit spending, dealer closings, and the creation of "Government Motors."

by on Jun.11, 2009

Senator Dodd

"How do we get paid back?"

In a hearing yesterday with the usual, large, degree of political posturing, the Senate Banking, Housing and Urban Affairs Committee took senior members of the Obama Administration to task for its handling of the collapse of Chrysler LLC and General Motors Corporation.

Senators from both sides of the aisle wanted to let voters know that they weren’t happy with the bailouts of Chrysler and GM, which — not coincidentally — are deeply unpopular with a clear majority of voters.

“The Auto Task Force must begin planning now for how to remove the government from the auto business,” said Senator Michael F. Bennet, a Democrat from Colorado.

This sentiment was repeated by the committee’s chairman, Connecticut Senator Christopher Dodd, also a Democrat, who is facing a strong re-election challenge because he allowed taxpayer funds to go for millions of dollars in bonuses to the financial speculators at failed AIG, which was part of the even more despised, if that’s possible, taxpayer bailouts for Wall Street plutocrats.

Senator Shelby

Shelby, to be fair, has consistently opposed taxpayer loans for domestic companies, unlike his colleagues.

Joining the “not at all happy about this parade” was Republican Richard Shelby, Alabama’s senior United States Senator, and Ranking Committee member, who has consistently opposed auto aid for domestic companies.

From the start Senator Bennet set the themes that echoed in the Dirksen hearing room all afternoon.

“I think an exit strategy from the auto industry ought to encompass three basic goals,” Bennet said: “One, seek to reform and repair the auto industry so it can compete in the long run; Two, get out as soon as is practicable; and, Three,  retrieve as much of the taxpayer investment as is practicable.”

Reluctant shareholders

Ron Bloom,left, and Ed Montgomery

"The government has no desire to own equity stakes in companies any longer than necessary."

The Obama Administration, no stranger itself to the art of posturing, clearly understood what it was facing in the hearing and its representatives came fully prepared to argue its case.

“The government has no desire to own equity stakes in companies any longer than necessary,” said Ron Bloom, senior advisor to the Auto Task Force, a cabinet level organization that is co-chaired by Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers. (more…)

Q&A: General Motors CFO Ray Young

Full transparency from GM's numbers man.

by on Jun.09, 2009

GM CFO Ray Young huddles with former Chairman Rick Wagoner during a Washington hearing called to discuss the automaker's request for a federal bailout.

GM CFO Ray Young huddles with former Chairman Rick Wagoner during a Washington hearing called to discuss the automaker's request for a federal bailout.

Call it trial by fire. Last year, as General Motors began the meltdown that ultimately led to its bankruptcy filing, last week, senior company officials frequently sat down with reporters to outline the latest cutbacks in jobs and production. There were the familiar faces, like former CEO Rick Wagoner, as well as the man who replaced him, in March, Fritz Henderson. But less familiar was Ray Young, the traditionally soft-spoken veteran who was appointed Chief Financial Officer, in March 2008.

It was clearly not a great time to be counting the beans at the fast-failing automaker, but it puts Young in a key strategic position, now that GM is shedding billions of debt, half of its North American brands and more than a third of its dealers under a court-managed restructuring largely crafted under the heavy hand of the Obama Administration.

A 23-year GM employee, Young was born in Guangzhou, China, emigrating to Canada as a youngster.  After earning an MBA at the University of Chicago, in 1986, he signed on with GM and has followed an increasingly familiar career path that included the GM Treasurer’s office, in New York, and several stints overseas. Young spoke with TheDetroitBureau’s Paul A. Eisenstein about opening GM’s books to its shareholders – the American taxpayer – the lessons learned in bankruptcy, and the threat of a GM boycott by the right wing.

TDB: When the White House forced out CEO Rick Wagoner, in March, there seemed to be a change in attitude by GM towards accepting a bankruptcy.  Is this accurate?

Young: It’s hard to say when it became more evident. Time worked against us. The Obama Administration set some pretty tough targets. In March, $26 billion worth of debt had to be converted into equity.  If you recall the original, December 31st agreement, Treasury had called for a two-third reduction.  When President Obama increased that to 90%, that increased the risk that bankruptcy would have to be the tool to reach those objectives.  So, March 30th, the stakes got raised.  Without being able to restructure the unsecured debt, we would not be able to restructure outside bankruptcy. (more…)

Delphi Finally Close to Emerging from Bankruptcy

Private equity firm provides the critical mass and capital.

by on Jun.01, 2009

Tom Gores of PlatinumEquity

"We know the business very well and understand its potential."

After spending nearly four years mired in bankruptcy court, Delphi Corporation may finally emerge from behind Chapter 11 protection as an asset of a Los Angeles-based private equity firm rather than under its own control.

Delphi, via a transaction with Parnassus Holdings II, LLC, an affiliate of Platinum Equity, and with the support of GM Components Holdings LLC, an affiliate of General Motors Corporation, has put together a new emergence plan that could stave off liquidation if it works. The President’s Auto Task Force worked behind the scenes to organize the deal.

Platinum is not new to Delphi. Platinum had bid successfully for Delphi’s Steering Gear plant last year but withdrew its bid last winter after the credit crisis made it difficult to obtain financing, but had indicated it was prepared to make another bid when the conditions were right.

This time, however, instead of taking the steering gear business, Platinum will take on all of Delphi’s remaining business.

The most significant development is Platinum will now get control of Delphi’s overseas business, which had not been part of the U.S. Bankruptcy Court proceedings. Parnassus will operate Delphi’s U.S. and non-U.S. businesses going forward with emergence capital and capital commitments of approximately $3.6 billion and without the labor-related legacy costs associated with the North American sites. They are being acquired by GM Components Holding LLC together with Delphi’s global Steering business.

Delphi will continue the wind-down and disposition of several discontinued operations, primarily located in the United States, through a reorganized entity expected to be called DPH Holdings Co. The sites include: Athens, Ala.; Fitzgerald, Ga.; New Castle, Ind.; Olathe, Kan.; select sites in Flint and Saginaw, Mich.; Clinton, Miss.; select sites in Columbus, Cortland, Dayton, Kettering and Warren, Ohio; a leased facility in Columbia, Tenn.; and Oak Creek Wisc.

Delphi Steering was spun off in 1999 as part of GM’s ill-fated spin off of Delphi. It has a 100-year history of innovation as well as comprehensive in-house design and development capabilities.    (more…)

Q&A: GM Vice Chairman Bob Lutz

A candid look at government intervention, and his own legacy.

by on May.28, 2009

Whether in or out of bankruptcy, says "car czar" Bob Lutz, the automaker is about to face a "cleansing fire."

Whether in or out of bankruptcy, says "car czar" Bob Lutz, GM is about to face a "cleansing fire."

It’s down to the proverbial wire for General Motors. Within the next several days, the automaker will either work out a last-minute settlement with bondholders or face a historic bankruptcy filing.

To some, bankruptcy or not,  there’s an equally significant event occurring with the retirement of GM’s Vice Chairman and “car czar,” Bob Lutz.  The spry septuagenarian executive surprised the automotive world when he joined the automaker, early in August 2001 for what was supposed to be a couple-year assignment helping rebuild GM’s once-legendary product development operations. As he leaves, there’s little doubt that the carmaker is building some of the best products it’s made in decades, if not, as he suggests, “the best in our history.”  But what happens “if and when” it goes into court-appointed bankruptcy protection?

That was the central theme of a speech by the former Marine pilot to the Automotive Press Association, on Thursday. While he acknowledged there are many unknowns, Lutz insisted, “We will pass through the cleansing fire of a radical restructuring — whether in or out of court” and emerge a “smaller, leaner powerhouse.”  Surprisingly, the traditionally conservative Lutz said much of GM’s potential turnaround can be credited to the Obama Administration, which is the first administration “in decades” to actually pay attention to “the largest manufacturing industry in the country.”

Following his speech, Lutz offered his thoughts on a variety of other issues in this question-and-answer session.

Subscribe to TheDetroitBureau.comQ: It seems certain GM will declare bankruptcy by the June 1st deadline set by President Obama.

Lutz: It’s a matter of  ‘if,’ and not when.  And if we do, we intend to get in and out very, very soon. (more…)