Sunday May 03, 2009

GM bankruptcy still likely despite plans to cut 23000 jobs, drop Pontiac brand

This article belongs to the GM, Ford and Chrysler bankruptcy watch story arc.

money.cnn.com :

General Motors announced plans to cut 23,000 U.S. jobs by 2011, drop its Pontiac brand and slash 40% of its dealer network in its latest bid to stay out of bankruptcy. The new restructuring proposal will leave the Treasury Department, and thus US taxpayers, and trust funds controlled by the United Auto Workers union owning 89% of GM.

GM CEO Fritz Henderson warned that a bankruptcy is still very likely unless bondholders agree to the swap. The moves are GM's latest efforts to cut costs and stem losses that have dogged its North American auto operations since 2005. The Obama administration has given GM only until the end of May to reach deals with creditors and unions to cut costs or be forced into bankruptcy. The Treasury Department extended GM an additional $2 billion in loans last week, bringing its total federal assistance to $15.4 billion.

- The moves so far still point very much towards a GM bankruptcy. They can drop all the brands they want and it still probably won't be enough. So why just drop Pontiac anyway? What's the point? And what's with this bond-equity swap deal anyway, who'd want stock that has dropped over 95% in recent years? As long as the crushing debt overhang remains, as long as the healthcare and pension plans remain, as long as the company continues to lose money, it remains headed in the same direction.

See also :

1. GM, Chrysler may go bankrupt after Senate rejects auto bailout plan as talks collapse
2. Report: GM mulling bankruptcy
3. GM warns of bankruptcy risk
4. GM said to speed bankruptcy plans
5. Chrysler files for bankruptcy, enters Fiat deal

(2009-05-03 15:05:58 SGT) [Biz] Permalink

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