For the first time, Henderson said the new GM will accept 4,100 dealer contracts out of 6,000, leaving 2,100 in the old company. GM had sent letters earlier this month to 1,100 dealers, saying their contracts would be ended by late next year.
Henderson said the new GM would sign “deferred termination agreements” with most of the dealers targeted for closure, giving them up to 17 months’ notice, to ease their hardship.
The plan will allow “thousands of dealerships to survive, while providing for an orderly wind-down of those dealerships not being retained,” Henderson said. “The alternative to the exercise of sound business judgment is that the Company would liquidate — and all dealerships would cease to be GM dealerships.”
Frankly, if a company goes bankrupt, I don’t see why the stock isn’t just completely finished. GM’s stock wasn’t finished today though — trading at one point at just over a dollar on the NYSE.
This great article from the Los Angeles Times lays out the details of why stocks trade after a bankruptcy. Essentially it has to do with short sellers needing to cover positions and those unfortunate to be holding for the really long haul needing a place to sell their shares. Who in the hell buys those shares?
At any rate, GM, formerly ticker symbol “GM” on the NYSE, will trade beginning June 2 as GMGMQ on the “penny” stock market at pinksheets.com.
Author of Why GM Matters, William Holstein, took questions today over at the Washington Post. Check out the transcript. Here’s what he had to say about GM’s shareholders:
Washington, D.C.: What happens to GM Stockholders now? I’ve seen a lot of info about bondholders, but that’s not the same (or is it)?
William Holstein: GM stockholders are expected to be wiped out. You get nothing for your shares. They become collector’s items.
The Obama Administration released the following fact sheet at 10 p.m. Sunday night regarding the path forward for GM and the government as 60% owner.
It’s being reported that GM’s bankruptcy filing will occur Monday morning at 8 o’clock. MarketWatch says tonight that the feds will support the company with $30 billion through a 60 to 90 day bankruptcy period.
What I found most interesting in tonight’s story at MarketWatch was this:
As a result of this restructuring, GM will lower its break-even point to sales of 10 million cars per year. Before the restructuring, GM needed to sell about 16 million car sales a year to turn a profit.
The way I read that, GM is either downsizing by about half or cutting its costs by about that much. When you hear all the millions and billions roiling around this story, you sometimes lose the scale of things. Ten million cars per year to break even versus 16 million is a number I understand.
Of course, GM is downsizing and cutting costs. But that number brings it home — GM, for the time being will be a smaller footprint on the trail of the U.S. economy. What’s to become of that old saw, “As GM goes, so goes the nation?”
Chrysler – New Lease on Life
(Source: White House Press Office)
THE PRESIDENT: Hey, guys. I know you haven’t seen enough of me lately, so — (laughter.)
One month ago, I spoke about some of the problems that have led to the crisis in the auto industry, and about what would be required to ensure that General Motors and Chrysler emerged from their current troubles stronger and more competitive. My team will continue working with General Motors as they strengthen their business plan and move towards restructuring that’s consistent with the principles that I’ve laid out.
And today, after consulting with my Auto Task Force, I can report that the necessary steps have been taken to give one of America’s most storied automakers, Chrysler, a new lease on life.
President Barack Obama plans to announce tomorrow that Chrysler LLC will be placed into Chapter 11 bankruptcy, leading to an alliance with Italian automaker Fiat SpA, people involved in the matter said.
Administration officials are still resolving outstanding issues, and the plan is not finished yet, said one of the people, who declined to be named. Any bankruptcy filing could come as soon as tomorrow, people familiar with the matter said.
Chrysler’s best assets would be sold to a new entity that would have an ownership structure similar to that envisioned in an out-of-court deal between the Auburn Hills, Michigan-base automaker and Turin, Italy-based Fiat, the people said.
The Italian company would become a 20 percent owner of Chrysler, and a union retiree health-care trust fund would own 55 percent, with the rest of the company staying in the government’s hands initially, people familiar with the matter said.
- Treasury pushes for Chrysler-Fiat Deal – Detroit Free Press
- Chrysler Union Members Vote – Wall Street Journal
(Source: NBC’s Meet the Press)
MR. DAVID GREGORY: … (Intro Deleted) Can General Motors be saved? With us, the new CEO, Fritz Henderson. … But first, we’re joined live from Detroit this morning by the new CEO of General Motors, Fritz Henderson.
Welcome to MEET THE PRESS.
MR. FRITZ HENDERSON: Good morning, David.
MR. GREGORY: The administration’s auto task force tasked General Motors with the idea of coming up with a viability plan. The company did that and the White House rejected it flatly. There were some stinging rebukes embedded in that report. Here’s just a sampling: “General Motors’ plan is not viable at is, at is–as it is currently structured. The assumptions in GM’s business plan are too optimistic. Progress has been far too slow.” Pretty harsh reaction from the Obama White House. How did the company get it wrong?
From NYT live blogging of Fritz Henderson, GM’s new CEO, press conference this a.m.:
In his strongest language of the news conference, Mr. Henderson says bankruptcy is now “more probable” for G.M. than in the past. Mr. Henderson said circumstances may drive G.M. into bankruptcy “as the strategy that we need to deploy.” He said, “If I didn’t want to be part of a bankruptcy, I would have said, no, I don’t want to be part of it.” He said he was asked to do the job and make G.M. successful, whatever it takes.