The WSJ is out with a muchly regurgitated piece, which may, however, finally end up being right. Turns out the negotiations between bondholders, General Motors (GM) and the intractable UAW are moving at the same pace as cars on a showroom floor. On February 17 GM is set to give the taxpayers a progress to report; and probably as for more money. With 48 hours to go, there has been minimal progress, it may finally be time to pull the plug.
GM's options are asking the administration for more money, which at this point has a one in a million chance of being granted (so I'm saying there's a chance), or filing for some kind of bankruptcy protection. Bankruptsy may be teh only truly viable long-term option, GM does still have solid revenue, despite low profit margins. Hopefully it also takes Chrysler with it.
One plan includes a Chapter 11 filing that would assemble all of GM's viable assets, including some U.S. brands and international operations, into a new company. The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked.
Now is the time to short the stock.
Sunday, February 15, 2009
Thursday, February 12, 2009
Gee Whiz
New York - General Motors Corp, the largest US automaker, is offering another round of early buyouts, this time to 22,000 older and relatively expensive union workers, the Wall Street Journal reported Thursday, citing unnamed GM managers.
The sources told the Journal they hope at least half will accept the deal.
The cuts would come on top of the elimination of 10,000 salaried
jobs around the world that the ailing auto company announced on Tuesday as part of its plan to prove financial viability to the US government.
The company would apparently draw a line under the offer to 22,000 members of the United Auto Workers (UAW) union and warn that it would be the last sweetened deal the company would offer, according to a GM spokesperson who talked to the industry magazine Automotive News.
It would be the third such offer in four years.
All told, GM still employs 62,000 UAW members. Worldwide, the company employs 245,000 people, including 55,000 in Europe.
The company is trying to hang on to 13.4 billion dollars in government loans, which could be withdrawn if GM does not come up with a survival plan by Tuesday. Chrysler motors has a similar condition hanging over its head for billions of dollars in government loans.
Both companies must tell the US Treasury Department how it will reorganize, restore profit and repay US loans by the end of 2011.
Amidst the year-old US recession, auto sales have dropped to their lowest in more than a decade.
The sources told the Journal they hope at least half will accept the deal.
The cuts would come on top of the elimination of 10,000 salaried
jobs around the world that the ailing auto company announced on Tuesday as part of its plan to prove financial viability to the US government.
The company would apparently draw a line under the offer to 22,000 members of the United Auto Workers (UAW) union and warn that it would be the last sweetened deal the company would offer, according to a GM spokesperson who talked to the industry magazine Automotive News.
It would be the third such offer in four years.
All told, GM still employs 62,000 UAW members. Worldwide, the company employs 245,000 people, including 55,000 in Europe.
The company is trying to hang on to 13.4 billion dollars in government loans, which could be withdrawn if GM does not come up with a survival plan by Tuesday. Chrysler motors has a similar condition hanging over its head for billions of dollars in government loans.
Both companies must tell the US Treasury Department how it will reorganize, restore profit and repay US loans by the end of 2011.
Amidst the year-old US recession, auto sales have dropped to their lowest in more than a decade.
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