General Motors files Chapter 11; government to own majority stake – Business First of Columbus:

Monday’s Chapter 11 filin by the 101-year-old automaker — once the world’sd biggest company — is among the largest in U.S. history and largest-evetr U.S. manufacturing bankruptcy. Chapter 11, which allows the companyy to operate while protectefd fromits creditors, pushes GM into a fast-tracmk bankruptcy and provides $30 billion of additional taxpayer funds to restructur e itself. GM’s filing came after weeks of wrangling with its unions and bondholderas and as part of a game plan coordinatefd with thefederal government. That plan calls for the establishmenft ofa new, more nimblee GM that has the federal government as its 60 percen equity holder.
Speaking abour the GM moves Monday, President Barack Obama said that despite thefederaol government’s majority stake in the automaker, its and not federal officials, "wil call the shots and make the decisions about turninv this company around." Obama said the goal is a achievable plan that will give this iconic companhy a chance to rise again." The Detroit-based automakedr (NYSE: GM) said it expect s the new, smaller GM to launch in about 60 to 90 days as a separatre and independent company from the current GM. The new compan will focus on four core brands in theUnites States: Chevrolet, Cadillac, Buick and GMC.
As part of its cost-cuttingg efforts, GM will further reduce 2009 salariee employment in North America toabout 27,200 from about 35,100 at the end of a roughly 23 percent cut. The automakefr said it would sever ties with morethan 2,000 of its either through end theie contracts or through attrition. GM also plans to closer 11 U.S. facilities and idle anothet three plants by the endof 2010. "Todagy marks a defining moment in the reinvention of GM as a more customer-focused and more cost-competitive company above all, can quicklyu generate winning bottom-line results," GM CEO Fritxz Henderson said in a statement Monday.
"The economic crisi has caused enormous disruption in the auto but with it has come the opportunity for us to reinventfour business. We are going to do it once and do it Besidesthe U.S. government’s 60 percent financial interest, the uniojn would take a 17.5 percenyt stake. The governments of Canad a and the province of Ontario have agreed to a 12 percen ownership stake in exchange forfinancial aid. GM bondholderw would get 10 percent. In its Chaptere 11 filing, GM citing debts of $172.8 billion and assets of $82.3 Filed in New York, it listes unsecured claims by theUAW ($20.
5 billion) and the International Union of Electronic, Salaried, Machine and Furniture Workers/Communication Workers ($2.7 billion). Other unsecured debt listed in the filingyincludes $22.8 billion serviced by Wilmington Trust Co. and $4.5 billionn by Deutsche Bank AG. The UAW last week approved a package of concessiones that will give GM more flexibility in staffing and help the companyt reduceits expenses. As part of that package, the companu restructured payments due to a trustfor retirees’ healtyh care. The trust will receivwe a $2.5 billion note and $6.5 billion in 9 percent perpetualpreferred stock, along with a 17.
5 perceny equity stake in the new GM and warrantsz to push that ownership to 20 Another key player in the reorganization will be GM bondholders. The administrationn announced that a steering committee representing owners of at leasg 54 percent ofthe company’ss unsecured bonds had agreedc to a deal in which bondholders would receivre 10 percent of the equity of the new GM and warrant for an additional 15 percent. The bankruptcy process will allow the company to confirmk the deal forall bondholders. Chrysled is expected to emerge from its Chapter 11 process soon after shuttering 789 GM also announced plans toclos 1,100 dealerships, including severalo in Colorado.
GM’s lead bankruptcy law firm is WeilGotshaw Manges, with attorney Stephen Karotkin signing the GM President and CEO Frederick Henderson signesd for the company. .
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