Update #4 June-01-2009 10:00 PDT:
Want to know where GM thinks it's headed? Check out the new "GM Reinvention" website that features the latest blogs, press releases and media mentions direct from the "New GM."
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Update #3 June-01-2009 09:30 PDT:
In a press conference this afternoon in New York, General Motors' CEO Fritz Henderson promised the "New GM" will provide better customer service and every new car and truck will be world class. During the BK, GM is open for business, continuing to provide warranty, service and customer support uninterrupted.
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Update #2 June-01-2009 06:30 PDT:
General Motors filed for Chapter 11 bankruptcy protection today. The move marks a dramatic fall from the pinnacle of American manufacturing might and prowess to the beginning of a smaller company that will be majority taxpayer-owned for the foreseeable future.
GM will be split into two companies: a trimmed-down “New GM” and an “Old GM,” which will include the pieces of the company that will be shut down.
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Update #1 May-31-2009 10:19 PDT:
The Obama administration's statement on GM's bankruptcy filing has been published online. Key points:
- "On March 30, 2009, President Obama laid out a framework for General Motors to achieve viability that required the Company to rework its business plan, accelerate its operational restructuring and make far greater reductions in its outstanding liabilities. After two months of significant management engagement, General Motors has developed such a plan and has already begun to make progress toward its achievement. The Company has also secured commitments of meaningful sacrifice from all of its major stakeholder groups, sacrifices sufficient for this plan to proceed forward. As a result, the President has deemed GM’s plan viable and will be making available about $30 billion of additional federal assistance to support GM’s restructuring plan. To effectuate its plan, General Motors will use Section 363 of the bankruptcy code to clear away the remaining impediments to its successful re-launch."
- "For the better part of a century, The General Motors Corporation has been one of the most recognizable and largest businesses in the world. Today will rank as another historic day for the company — the end of an old General Motors, and the beginning of a new one."
- "GM is undertaking a significant operational restructuring that will address past failures, dramatically improve its overall cost structure, and allow the company to move toward profitability even if the auto market recovers slowly. As a result of this restructuring, GM will lower its breakeven point to a 10 million annual car sales environment. Before the restructuring, GM’s breakeven point was in excess of 16million annual car sales."
- "The Governments of Canada and Ontario will participate alongside the U.S. Treasury by lending $9.5 billion to GM and New GM. The Canadian and Ontario governments will receive approximately $1.7 billion in debt and preferred stock, and approximately 12% of the equity of the new GM. Based on its substantial financial contribution, the Canadian government will also have the right to select one initial director."
- "The government will protect the taxpayers’ investment by managing itsownership stake in a hands-off, commercial manner. The government willnot interfere with or exert control over day-to-day company operations.No government employees will serve on the boards or be employed bythese companies."
- "GM will continue to honor consumer warranties. This past week, the U.S. Treasury made available the Warranty Support Program to GM and $361 million was funded to a special vehicle available to provide a backstop on the orderly payment of warranties for cars sold during this restructuring period."
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According to numerous business publications and news outlets, General Motors is expected to enter Chapter 11 bankruptcy protection Monday morning, June 1, with the U.S. federal government taking control of up to 60 percent of the court-restructured company.
GM is the second-largest auto manufacturer in the world, after Toyota. It produces the No. 2 best-selling vehicle in the U.S.: the Chevrolet Silverado light- and heavy-duty pickup trucks, which are second behind the Ford F-Series light- and heavy-duty pickups.
President Barack Obama is expected to officially announce the bankruptcy move early Monday. GM is expected to receive as much as $30 billion in financing from the government, in addition to $20 billion previously injected into GM by the U.S. Treasury. The bankruptcy proceedings are expected to take 60 to 90 days and create a smaller GM that can be profitable even if new-vehicle sales remain at only 10 million units a year in the United States.
To achieve its smaller footprint, GM will likely have to lay off up to 21,000 more workers and close or idle up to 14 factories. Forty percent of the company’s 6,000 dealers are also expected to be shuttered.
The federal government will continue to stand behind GM's .
Developing…
[Sources: Bloomberg, New York Times, The Wall Street Journal]
