A new General Motors has exited bankruptcy under a rescue plan financed by the Obama administration and the Canadian government. The new GM emerges just weeks after a similar government-backed package was used to rescue Chrysler.
AFP - A new General Motors emerged from bankruptcy Friday under a government-backed plan to rescue the troubled US auto giant, the company announced.
The automaker transferred its main assets to a new government-supported car company, under a plan financed by the administration of President Barack Obama and the Canadian government.
Under the plan, the US government will own about 61 percent of the new auto company, while the Canadian government and a United Auto Workers union health care trust and bondholders will own the rest.
The fast-track plan, similar to the one used to rescue Chrysler, creates a new auto company that will acquire the main producing assets of the automaker, while the old GM will remain under bankruptcy court supervision.
"Today marks a new beginning for General Motors, one that will allow every employee, including me, to get back to the business of designing, building and selling great cars and trucks and serving the needs of our customers," said Fritz Henderson, GM president and chief executive.
The "new GM" will be a leaner, smaller company after having shed tens of thousands of workers, eliminated or sold storied brands, shuttered scores of factories and rewritten its labor contracts to slash costs.
The new GM will keep four key brands -- Chevrolet, Cadillac, Buick and GMC -- and will have a total of just 34 US nameplates by 2010.
Several brands owned by the old GM, including Saturn, Hummer, Opel and Pontiac, have been shed or are being sold.
"One thing we have learned from the last 100 days is that GM can move quickly and decisively," said Henderson.
"Today, we take the intensity, decisiveness and speed of the past several months and transfer it from the triage of the bankruptcy process to the creation and operation of a new General Motors."
Once the world's largest corporation, General Motors sold more vehicles than any other automaker from 1931 through 2007, after which it lost the crown to Japan's Toyota.
The new GM emerges just weeks after a similar government-backed effort to rescue number three US automaker Chrysler under a plan that gave Italian automaker Fiat a large stake and operational control.
For GM, the new firm will be unencumbered by the bulk of the massive debt load it racked up during years of bleeding balance sheets.
GM entered bankruptcy protection on June 1 with liabilities of 172.8 billion dollars and emerged with 48.4 billion in debt.
The US government -- which has provided some 50 billion dollars in financing -- received a 60.8 percent stake in the new company.
Canada, which provided 9.1 billion dollars in loans, has an 11.7 percent stake and a United Auto Workers union retiree healthcare trust fund holds 17.5 percent.
Creditors holding about 54 percent of GM bonds agreed to a plan that would swap 27.1 billion dollars in debt for a 10 percent stake and warrants allowing them to buy an additional 15 percent stake.
Obama, whose auto taskforce spearheaded the GM restructuring plan, has said his administration has no intention of nationalizing the automaker over the long term and will not be participating in its day-to-day operations.
GM was able to proceed swiftly because it spent months preparing for the bankruptcy process as well as reaching agreements with its main union and most of its creditors.
Date created : 2009-07-10