GM is asking for another $16.6B and Chrysler another $2B
#31
"said Gregory Jackson, owner of Prestige Automotive Group, which includes three Saturn dealerships in Jacksonville, Fla. "It's a real travesty ... why Saturn has not been able to capture momentum from a sales standpoint, only God knows."
Too bad, but he's a little out of touch with the reality of what makes a good automotive product .
Too bad, but he's a little out of touch with the reality of what makes a good automotive product .
#32
I called it the last time, even this was faster than I expected. We need to stop throwing money down the rat hole known as the US Auto Industry. let Ford pickup the pieces. Enough already. I was pissed last time we bailed them out, now this. I have no words for how I feel.
#33
I called it the last time, even this was faster than I expected. We need to stop throwing money down the rat hole known as the US Auto Industry. let Ford pickup the pieces. Enough already. I was pissed last time we bailed them out, now this. I have no words for how I feel.
but....do you know how many jobs would be immediately lost if GM shut its doors??
#34
WOW.
Simply amazing.
Yea, you're right. I mean, why learn our lesson from the first time, right? We should just give them another 17 billion, that way when they inevitably fail, or need another bailout, we can repeat the process again!
Simply amazing.
Yea, you're right. I mean, why learn our lesson from the first time, right? We should just give them another 17 billion, that way when they inevitably fail, or need another bailout, we can repeat the process again!
Last edited by tsavo; 02-18-09 at 01:19 PM.
#35
This is similar to the big Pork Package called the Stimulus Bill, the one that it was critical to get signed, you know, the one that if we don't shove this down the taxpayers throats now it will be the end of the world. No one has read all 1,100 pages, but it's certainly beginning to look like it’s light on stimulus and heavy on socialism. Now we're all saddled with a real boondoggle, and GM/Chrysler want to get into our knickers even further. Chapter 11 is starting to sound better and better! What happens when the taxpayers money runs out?
#36
Bankruptcy remains an option for GM, analysts say
DETROIT (Reuters) – A government-backed bankruptcy reorganization remains an option for saving General Motors Corp and Chrysler LLC, analysts said on Wednesday, even though the automakers have said they would rather not go down that road.
GM and Chrysler asked for billions of dollars more in federal aid on Tuesday and announced sweeping changes including capacity reductions and job cuts.
Some Wall Street analysts were disappointed that the restructuring plans submitted to the U.S. Treasury did not include key concessions from the United Auto Workers union and the automakers' bondholders.
One analyst said that taking the bankruptcy option off the table would reduce the bargaining power of the companies.
Both GM and Chrysler analyzed a possible bankruptcy filing in their restructuring plans but stressed that it was not their preferred method for reorganizing and that they hoped to avoid this scenario.
GM, which has requested $16.4 billion in additional loans from the U.S. government for a total of up to $30 billion, has said it would run out of cash as soon as March without new federal funding.
The request came shortly after smaller rival Chrysler asked for another $5 billion in aid.
GM's request that a sizable chunk of total aid come in the form of preferred equity rather than debt is a "tacit acknowledgment of the fact that GM may emerge from an out-of-court process as a still highly levered firm," JP Morgan analyst Himanshu Patel said.
David Leiker, analyst with Robert W. Baird, still sees bankruptcy as the best option for a reorganization.
"Though likely to be painful near-term, we continue to believe that the challenges to restructuring GM and Chrysler are too complicated to be met outside of a bankruptcy," Leiker said.
In its restructuring blueprint, GM estimated that if it were forced to reorganize in a traditional bankruptcy, the tab for the government could touch $100 billion in bankruptcy financing.
Chrysler estimated that the bill for its bankruptcy could hit $1,200 per taxpayer.
GM also outlined cost-reduction actions but still has to reach an agreement with its bondholders and the UAW on how to reduce the roughly $48 billion it owes both groups.
An equity-for-debt swap, which is being considered, could significantly hit stockholders.
"A substantial majority of the pro-forma equity in General Motors would be distributed to exchanging bondholders and the UAW VEBA," Credit Suisse analyst Chris Ceraso said. "The existing equity holders would largely be wiped out by the bond and VEBA exchanges."
The UAW VEBA is trust fund set up to cover employee healthcare costs.
Another issue that could crop up for auto investors is the potential for "going concern opinions" from auditors due to the liquidity crunch, operational losses and solvency issues in the auto industry, according to Grant Thornton, a corporate advisory and restructuring services firm.
A going concern opinion is a statement that there is substantial doubt about the entity's ability to continue as a going concern, something that would be typically mentioned in U.S. Securities and Exchange Commission filings by companies.
"It's important for the public, the supply base and all of the parties involved in restructuring the auto industry not to overreact if they start seeing 'going concern' opinions," said Kimberly Rodriguez, co-leader of Grant Thornton's global automotive team, adding that the radical restructurings GM and Chrysler are undertaking would ultimately help salvage the industry.
GM shares were down 9 cents or 4.13 percent at $2.09 in afternoon trading on the New York Stock Exchange.
(Reporting by Poornima Gupta and David Bailey, editing by Matthew Lewis and Gerald E. McCormick)
GM and Chrysler asked for billions of dollars more in federal aid on Tuesday and announced sweeping changes including capacity reductions and job cuts.
Some Wall Street analysts were disappointed that the restructuring plans submitted to the U.S. Treasury did not include key concessions from the United Auto Workers union and the automakers' bondholders.
One analyst said that taking the bankruptcy option off the table would reduce the bargaining power of the companies.
Both GM and Chrysler analyzed a possible bankruptcy filing in their restructuring plans but stressed that it was not their preferred method for reorganizing and that they hoped to avoid this scenario.
GM, which has requested $16.4 billion in additional loans from the U.S. government for a total of up to $30 billion, has said it would run out of cash as soon as March without new federal funding.
The request came shortly after smaller rival Chrysler asked for another $5 billion in aid.
GM's request that a sizable chunk of total aid come in the form of preferred equity rather than debt is a "tacit acknowledgment of the fact that GM may emerge from an out-of-court process as a still highly levered firm," JP Morgan analyst Himanshu Patel said.
David Leiker, analyst with Robert W. Baird, still sees bankruptcy as the best option for a reorganization.
"Though likely to be painful near-term, we continue to believe that the challenges to restructuring GM and Chrysler are too complicated to be met outside of a bankruptcy," Leiker said.
In its restructuring blueprint, GM estimated that if it were forced to reorganize in a traditional bankruptcy, the tab for the government could touch $100 billion in bankruptcy financing.
Chrysler estimated that the bill for its bankruptcy could hit $1,200 per taxpayer.
GM also outlined cost-reduction actions but still has to reach an agreement with its bondholders and the UAW on how to reduce the roughly $48 billion it owes both groups.
An equity-for-debt swap, which is being considered, could significantly hit stockholders.
"A substantial majority of the pro-forma equity in General Motors would be distributed to exchanging bondholders and the UAW VEBA," Credit Suisse analyst Chris Ceraso said. "The existing equity holders would largely be wiped out by the bond and VEBA exchanges."
The UAW VEBA is trust fund set up to cover employee healthcare costs.
Another issue that could crop up for auto investors is the potential for "going concern opinions" from auditors due to the liquidity crunch, operational losses and solvency issues in the auto industry, according to Grant Thornton, a corporate advisory and restructuring services firm.
A going concern opinion is a statement that there is substantial doubt about the entity's ability to continue as a going concern, something that would be typically mentioned in U.S. Securities and Exchange Commission filings by companies.
"It's important for the public, the supply base and all of the parties involved in restructuring the auto industry not to overreact if they start seeing 'going concern' opinions," said Kimberly Rodriguez, co-leader of Grant Thornton's global automotive team, adding that the radical restructurings GM and Chrysler are undertaking would ultimately help salvage the industry.
GM shares were down 9 cents or 4.13 percent at $2.09 in afternoon trading on the New York Stock Exchange.
(Reporting by Poornima Gupta and David Bailey, editing by Matthew Lewis and Gerald E. McCormick)
ffpower says: So bankruptcy was an option before the December bridge loan, after the bridge loan, before requesting the additional $16.6B and after they send the request in. Can anyone guarantee that it won't remain an option after the government decides to grant them the additional loan?
Yeah, that's what I thought...
#37
I agree too. kill GMC brand. simply costs more to operate.
but my suggestion is to merge saturn with buick ( oh, future products from opel).
Buick get a refresh of a whole lineup.
So GM can establish BUICK as a mainstream brand and
have strong sale numbers both in China and US. ( two biggest market in the world, much bigger than others. if GM get these two markets, it will be profitable again. Buick is very hot in china and have a much bigger lineup than here.)
#39
So why do I feel Mulally, and F, are the dumbest of the 3? Simple. Mulally went out and borrowed before the credit markets imploded and banked the cash. But what is going on now? While GM and ChryCo are getting their monthly taxpayer subsidy check, F is burning off the cash that they had the foresight to go out and raise on their own.
But they are burning through it. And it has much less attractive terms than the federal money. If US annual sales stay where they are, F will have burned through a bunch of borrowed money and still be there with GM and ChryCo who at started getting their handout months before F.
They will have the same, or worse UAW terms to deal with, don't forget, everyone has bought into this "F is in good shape" nonsense so the UAW will not let them have the concessions that GM and ChryCo can get. And if GM and ChryCo don't get concessions, well then the taxpayer will throw more money at them. F will have to pay their own bills. Until they burn through that money they borrowed. And then they are in line. And that is why their stock isn't doing anything much different than GMs.
#40
I don't even know if the the numbers they have thrown out have included Hummer, which is dead within a month, Saab, which they are trying to sell to the Swedish government because no one else wants them, or Saturn which is a dead duck. How many more thousands of jobs are already destined to be thrown away?
Like I said, I really don't know how many jobs are going to be lost if GM were to shut its doors tomorrow. But I am getting a pretty good idea how many jobs are going to be lost with the taxpayer keeping their doors open tomorrow.
#41
You guys seriously think we are talking about another 16.6 billion? Come on, we have to be smarter than that. There is no way that is what we are talking about. The next payments to VEBA, which aren't addressed in the GM plan, is $20B for GM and $9.9B for ChryCo. Now the bondholders may be conned into taking stock for their $48B in loans they made but do you think the UAW is going to take $20B of GM stock and goodness knows what from Cerberus for ChryCo? No way. The UAW will make all sorts of pronouncements about everyone having to suffer equally and they will talk about "tentative" agreements but Gettelfinger is going to want at least $30B of tax payer money on top of that $16.6B. And that will just get us to another few months along. And my guess is that F will burn through all those loans they got and be adding their debt into this before the end of the year. The price tag for this is going to be well north of $100B and it is pretty naive to think it won't.
#42
So... Let me get this straight... GM was the first auto company to ask for a bailout... Then they get the bailout and say everything will be right as pie. Now, they say they need more bailout money and they think that they will be helping the economy by FIRING 25,000 MORE people????
GM can go to hell...
GM can go to hell...
#43
So... Let me get this straight... GM was the first auto company to ask for a bailout... Then they get the bailout and say everything will be right as pie. Now, they say they need more bailout money and they think that they will be helping the economy by FIRING 25,000 MORE people????
GM can go to hell...
GM can go to hell...
Talking about getting deeper into debt for these guys is just lunacy. If they can't get through bankruptcy, they don't deserve to be kept alive at taxpayer's expense. And yes I am aware that it will mean a bunch of jobs lost. But a whole lot of jobs are going to be lost even if we do bail them out.
It just doesn't make sense.
#44
Chrysler - The quintessential American auto company
In its latest submission to Washington, Chrysler calls itself "the quintessential American auto company." America can but pray that this particular claim is wide of the mark.
In any case, pumping more taxpayer money into Chrysler and General Motors, which also submitted a revised plan this ...
In any case, pumping more taxpayer money into Chrysler and General Motors, which also submitted a revised plan this ...
ffpower says: I think giving GM another $16.6B and Chrysler $2B is the QUINTESSENTIAL example of epic failure.
#45
Saturn
Saturn owners have received a letter from the brand alerting them that it may be spun off by General Motors as an independent marketing and distribution company, reports Automotive News. In the letter, which was sent out to about 1.5 million Saturn owners, the brand said it will have to continue selling products from other manufacturers or General Motors.
“An independent Saturn would still have its great retailers, and it would continue to source current products from GM through 2011. If successful, SDC at that point would source products from other manufacturers,” said the letter.
A spokesman from Saturn said that the letter was sent out to assure current customers and potential Saturn buyers that the brand is viable and that GM will back warranties and product quality.
Saturn’s General Manager Jill Lajdziak said that the goal of a spinoff brand will be to find future vehicles to sell that match Saturn’s theme of affordable and fuel-efficient vehicles.