Sunday, May 31, 2009

GM Prepares to Die...

...finally, at least almost finally, in a funny Chapter 11 bankruptcy sort of way...and, tomorrow, not yet today.

Tomorrow at 8 a.m. EST it will be final when GM admits to a bankruptcy judge what everyone and their mother (literally) already knew: GM is bankrupt.

Some quick notes on the filing and goals of The U.S. Treasury:

From Click that link for the raw data.

  • We The People will supply another $30 billion (initially) on top of the $20 billion we already have lent.
  • Goverments of Ontario and Canada will combine to lend $9.5 billion.
  • GM will have been lent $60 billion in the last six months, which is fairly amazing.
  • Restructuring to breakeven in a 10mm cars sold a year (domestically) environment (we're annualizing nine and change right now, which is down from about seventeen million at peak, I believe).
  • Will close 11 plants. Will idle 3 additional plants.
  • Will attempt to 363 to assets in a quick sale to strip liabilities and form GoodGM. Will be harder to do than in Chrysler given so many more constituents, but given the Federalis are pushing it, "resistance is futile", as they say in our Administration.
  • The Borg, I mean The Administration, has decided that future demand for cars will be smaller cars, so they'll be retooling to supply smaller cars.
  • Will honor all warranties.
  • UAW took a big haircut - allegedly even bigger than the Bush Administration was seeking (though the environment has worsened since then as well).
  • Ownership:
  • We The People: 60% plus appoint all the Directors other than the two (one
    each) Canadian and UAW appointees.
  • Gov'ts of Ontario and Canada: 12% and a Director.
  • UAW via VEBA: 17.5% (w/ warrants for 2.5%) and a Director
  • Bondholders: 10% (plus warrants for 15%)

The goal is to have one of the cleanest auto balance sheets in the world and a highly competitive cost structure.

I'll go ahead and say it:

  1. Sucks to be Ford (aka, "you next"); and
  2. Everything about this is totally consistent with my Grand Unified Conspiracy Theory (it's almost done, I promise).

No comments: