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Sorting Out GM Stock – Old versus New

As the maker prepares for an IPO beware of the old stock.

by on Jun.23, 2010

General Motors Company holds all of the productive assets.

As General Motors prepares to register with the U.S. Securities and Exchange Commission for sale of stock in the new Company, confusion exists about the old stock of the bankrupt Corporation. It’s worthless.

General Motors Company is the “new GM,” which emerged from bankruptcy last summer. All of GM’s continuing operations and assets are completely out of bankruptcy and are now operating as an independent and separate company called “General Motors Company.” It holds virtually all of the productive assets of the old Corporation. These include the Cadillac, Chevrolet, Buick, and GMC brands, and the plants and other hard assets that those brands need to continue operations. GM Company also owns all of its overseas operations.

General Motors Company posted a first-quarter profit of $865 million, but it wasn’t a strong performance since the profit came from relief from the interest payments on debt that was wiped out in the bankruptcy. The company has repaid $6.7 billion in outstanding U.S. government loans and $1.4 billion to Canadian governments, with money taxpayers advanced to it.



There are currently no shares of General Motors Company for sale to the public and there won’t be until it is given legal approval to do so. It’s also unknown how many shares will be offered for public sale or by whom, or at what price.


Europe Quite Challenge for GM, CFO Admits

Chinese and Latin American arms are profitable. U.S. is, well...

by on Mar.17, 2010

Logo on the Renaissance Center's 740 foot high, 73-floor hotel tower identifies the complex as General Motors Global Headquarters.

General Motors Company should be profitable this year even though its European operations are a mess, said Chris Liddell, GM’s new chief financial officer.

In Europe for 2009, General Motors  suffered from its well-publicized bankruptcy, problems at Saab and Opel/Vauxhall, as group sales for all brands dropped more than 9%. GM’s share settled at 9% for fifth place, with it losing almost 2 percentage points in share.

Liddell also stressed at a meeting with reporters today that he was not offering any kind of official  financial guidance to investors or analysts.

But he said the automaker has a chance of being profitable in 2010. GM’s operations in China and Latin America already are profitable, North American is “in the middle” while GM’s European operations are struggling.

“ I think we have a reasonable chance of being profitable this year,” said Liddell, who was initially recruited from Microsoft by former GM CEO Fritz Henderson.

Liddell said GM’s profitability and the future stock offering are interconnected. “There are a large number of factors that go into the decision,” to launch an initial public offering of new common stock, he said.    (more…)

Chrysler Financial Repays Government Loans

Lending arm pays back $1.5 billion received in January.

by on Jul.14, 2009

Could Capitol Hill Critics Sink the Fiat Alliance?

Last winter, lots of people predicted this day would never come. But mark this day down — one of the recipients of the government bailout money, Chrysler Financial, has repaid the U.S. Treasury, sending the $1.5 billion it received in January back to Washington.

Meanwhile while GMAC Financial Services Inc. said it will send the government a $271 million dividend check next month.

The repayment by Chrysler Financial and the special dividend from GMAC mark the first step toward repayment of the billions Detroit borrowed last winter when the U.S. auto industry and their finance companies were on the verge of collapse.

Interest Free!

Interest Free!

Chrysler Financial said Tuesday it has repaid in full the $1.5 billion of Troubled Asset Relief Program or TARP loans, which Congress approved last year to bailout troubled banks and the Obama administration used to help Detroit’s struggling automakers when Chrysler and GM were sinking fast. So far, the Treasury Department hasn’t asked for an early payment penalty.


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.


General Motors Bankruptcy Proceeding Apace

Once again, critics are confounded, as the judge moves ahead.

by on Jun.26, 2009


Judge Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York has granted GM’s motions for debtor in possession (DIP) financing from the U.S. Treasury and the Canadian and Ontario governments.

The final ruling, one of several issued late yesterday, follows a preliminary one on June 1st when GM declared bankruptcy, which authorized GM up to use up to $15 billion from the estate. Now GM can spend as much as $33.3 billion in DIP financing.

The money, of course, is coming from the U.S. Treasury and the Canadian Federal, as well as the Ontario provincial governments.The money will be used for, among other things, GM’s normal liquidity requirements, including employee wages, health care benefits, supplier payments, and other general operating expenses.

While not necessary indicative of how the rest of the case will proceed, the rulings are the latest indication that, like Chrysler, GM will move out of bankruptcy protection at lightning speed compared to the usual glacially-slow lawyer-fee-driven process.

Delete this copy after inserting to retain outline box as in photos

GM needs to emerge as a new GM as quickly as possible to remove the insolvent stigma, and get back to the business of selling cars and trucks. Year-to-date through May, GM’s sales are off 44%, compared to an industry drop of 37%.


Suppliers ask $10 Billion More in Taxpayer Funds

Trade groups make another request to the U.S. Treasury, citing "immediate threats" to industry and vehicle manufacturing.

by on Jun.16, 2009

President of E&E Manufacturing, Wes Smith, testifying before the House Small Business Committee at a hearing examining the impact of the auto crisis on small suppliers.

The president of E&E Manufacturing, Wes Smith, explains to the House Small Business Committee the negative effects of the crisis on small suppliers.

The Original Equipment Suppliers Association (OESA) has submitted a plan to the U.S. Department of the Treasury that outlines “immediate actions” needed to stabilize the increasingly deteriorating situation in the country’s auto supply base. OESA points to 49 supplier insolvencies in 2009, and predicts an additional 60 supplier insolvencies in 2010 if the current situation prevails.

“The supplier industry is witnessing a very rapid and dangerous decline,” said Neil De Koker, OESA president. “Further losses would exacerbate the devastation within the supplier industry, threaten the ability to support a domestic vehicle manufacturing industry, and worsen the economic conditions in communities across the country.”

The trade group cites a continued lack of available credit, severely reduced vehicle production levels, and planned summer shutdowns by GM and Chrysler as all worsening the financial state of the fragile supplier industry.

Small suppliers, suppliers manufacturing in the U.S. and shipping to Canada and Mexico, and suppliers directly providing replacement and warranty parts and tooling are among the companies that have found themselves without access to capital during the ongoing credit crunch.

It is not immediately clear how much more support for the auto industry will be forthcoming from the Treasury after its huge bailouts of Chrysler and General Motors, although there is a rational for this politically unpopular option to protect taxpayer investments in both companies. Most suppliers have plans to downsize and move existing jobs offshore as unemployment in the U.S. continues to increase. (more…)

GM Small B-Car Developed. Plant Selection Lags

The company vows to announce the U.S. site by summer's end.

by on Jun.05, 2009


The Pontiac G3 B-car is built in Mexico, and derived from a Korean-designed Daewoo platform.

General Motors Corporation is now committed to building a new small car in the U.S. sooner rather than later, following the intervention of the United Auto Workers and the U.S. Treasury, which persuaded, if that’s the right word, GM to build the car in the U.S. rather than China or South Korea.

However, it’s pretty clear that the new car will be based on the current B-car platform developed by Daewoo Automotive Technologies or DAT for worldwide distribution.

GM had hesitated bringing the subcompact car to the U.S. for fear it was too small for the U.S. market, but it had done the engineering required to meet U.S. safety regulations as gas prices spiked in the last couple of years.

GM, however, is now fully prepared to assemble the car in the U.S.    (more…)

GM Asks for another $2.6 Billion to last until June 1

The ailing automaker continues to consume taxpayers' cash.

by on May.11, 2009

GM Renaissance Center

Rumors are circulating that GM will vacate its corporate headquarters in Detroit to cut costs.

General Motors Corporation has requested another $2.6 billion in cash from the U.S. Treasury so that it can survive until the June 1st deadline for the approval of its revised “Viability Plan.”

The plan, as it now stands, forecasts the need for a total of $27 billion in U.S. taxpayer-supplied funds. Back in February GM requested $22.5 billion in taxpayer assistance for its restructuring.

The revised plan also assumes that GM will receive $5.6 billion from foreign governments, and another $5.7 billion from the U.S. Department of Energy to develop fuel efficient vehicles. None of this is certain, of course.

GM attributed its need for more money to a higher negative cash flow that resulted from lower than forecast vehicle sales. Through April, GM sales have plummeted 45% in the U.S.

On April 22nd, GM entered into a second amendment to the existing Treasury Loan Agreement, which increased to $15.4 billion the maximum amount available under the agreement. GM borrowed the remaining $2.0 billion available under that agreement on April 24th, 2009. GM has now apparently spent that cash.    (more…)

GMAC Fails U.S. Treasury Stress Test and Could Fail if the Recession Continues

The source of credit for GM and Chrysler needs its own bailout?

by on May.08, 2009

GMAC logo

Color that logo red, as GMAC losses mount -- and it is named one of the weakest banks by the Feds.

Add another worry to the long list already attached to struggling automakers. GMAC, the storied company that supplies dealer and consumer financing for vehicles at General Motors since 1919, is in need of an additional $11.5 billion in capital, according to the U.S. Treasury Department. This amount doesn’t include the additional capital GMAC will need to take over Chrysler’s wholesale and retail financing needs when it emerges from bankruptcy.

Treasury, the agency that has been printing increasing amounts of money by issuing staggering amounts of debt in a desperate attempt to halt the Great Recession, released a list of financial institutions that failed its stress test yesterday afternoon.

GMAC was among the troubled institutions. In fact, GMAC had the biggest problem with liquidity of any bank for its size. That finding came just as the lender revealed that its first-quarter losses had jumped to $675 million, up from $599 million a year ago. The numbers actually would have been worse but for $631 million in after-tax gains from retiring some of its debt.

This means that GMAC now has until November 9, 2009, to increase common shareholder equity by $11.5 billion, of which $9.1 billion must be new capital. Ways to do this could include issuance of new common equity in a depressed market for such, or issuance of mandatory convertible preferred shares, or the conversion of existing equity into a form of “Tier 1″ common equity.    (more…)

Spring Selling Season Turns Out To Be A Non-Event

Off-Shore owned brands at 54% gain market share yet again.

by on May.04, 2009


The anticipated spring vehicle sales boost fails to materialize.

If wishes were auto sales, than dealers would be riding high, but once again predictions of a resurgence of sales as the spring selling season began in April were made a mockery of as the final data became available.

Overall April sales, including domestic and offshore-owned brands, unadjusted for business days, were down 34.4% from April 2008, according to numbers from Autodata Corporation. The seasonally adjusted annual sales rate (SAAR) now stands at 9.5 million, where it has been stuck all year. 

Offshore-owned brands sold 442,124 vehicles in April, down from 656,034 in April 2008. Asian brands accounted for 45.5% of the market, up from 44.7%i n April 2008, and Europeans had an 8.5% share, up from 7.5%. Domestic brands finished the month with 46% of the market. 

“We haven’t seen the numbers we hoped for this spring,” said American International Automobile Dealers Association Chairman, Russ Darrow. “It is becoming increasingly clear that point-of-sale stimulation is necessary to jumpstart a recovery. Specifically, we need Congress to pass a scrappage/fleet modernization bill. Any bill must be immediate, simple, and inclusive of all brands retailed in the United States.”   (more…)