GM, Chrysler Must Revamp Plans to Get More U.S. Aid (Update2)


By John Hughes

March 30 (Bloomberg) -- General Motors Corp. and Chrysler LLC must
overhaul their recovery plans with deeper concessions to justify further
taxpayer aid, and bankruptcy may ultimately be their best chance, an
Obama administration official said.

The administration demanded the resignation of GM Chief Executive
Officer Rick Wagoner, and the company said he will be replaced by Fritz
Henderson, its president and chief operating officer. GM will also
replace most of its board and must increase reliance on producing more
fuel-efficient vehicles, under findings to be announced today at the
White House by President Barack Obama.

Chrysler will get $6 billion in aid only if it completes a partnership
with Italian carmaker Fiat SpA in 30 days, said the administration
official, who spoke to reporters and declined to be identified before
Obama presents the decision. Unless it combines with Fiat, Chrysler
won’t get any more U.S. help because it isn’t viable as a stand-alone
company, the administration found.

Auburn Hills, Michigan-based Chrysler values its proposed technology
sharing with Turin-based Fiat at $8 billion to $10 billion. Assuming the
accord between the two companies is approved, Fiat will produce its
first model with Chrysler in 2011, Fiat CEO Sergio Marchionne has said.

Detroit-based GM sought as much as $16.6 billion in additional aid after
receiving $13.4 billion since December. Chrysler sought $5 billion after
receiving $4 billion. Both had to show progress by the end of this month
in matters such as GM’s need to reduce unsecured debt by two-thirds.

Shares Plunge

General Motors fell as much as 57 cents, or 21 percent, to 2.15 euros
and was down 15 percent as of 10:18 a.m. in Frankfurt. The stock has
plunged 22.6 percent this year in Germany. GM tumbled 87 percent in New
York Stock Exchange composite trading last year, the most among the 30
stocks in the Dow Jones Industrial Average.

Neither company completed the tasks, the administration official said.
The aid plans submitted to the government Feb. 17 don’t warrant
additional assistance, the administration concluded. GM’s plan to cut
unsecured debt by two-thirds wasn’t sufficient, and Chrysler’s debt was
far beyond what the company could sustain, the official said.

GM’s plan wouldn’t lead to success even in an improved economy, the
administration found. The new strategy sought by the administration
would focus on sustainable profit and significant changes in brands,
workforce, nameplates and the retail network. Board member Kent Kresa
will serve as GM’s interim chairman.

Kresa is a former chairman and chief executive of Northrop Grumman
Corp., the third-largest U.S. defense company. He is also chairman of
Avery Dennison Corp., which develops self adhesives for consumer products.

Kresa, Henderson Comment

It’s “not yet known” who the board will nominate to constitute the new
majority of directors at the next annual meeting, Kresa said in a
statement posted on GM’s Web site. Wagoner said in a separate statement
that Henderson is “an excellent choice” to replace him and “the ideal
person” to lead the company through restructuring.

GM, which will continue to receive an undisclosed amount of government
aid as it develops a new plan over 60 days, will get greater guidance
from the Treasury and outside advisers in the process than previously,
according to the administration. The government was silent on how much
more aid GM may receive if it devises a successful plan.

Chrysler’s plan included assumptions that were unrealistic or overly
optimistic, according to the administration. Chrysler is being required
to get greater concessions from the United Auto Workers than its plan
requires and must get rid of the vast majority of outstanding secured debt.

The government will support Chrysler for 30 days as it attempts to make
final its agreement with Fiat. Chrysler has proposed giving Fiat a 35
percent stake in the company.

Chrysler Corp., as it was known then, took out $1.2 billion in
government-backed loans in 1980 and repaid the money in 1983.

Quick Bankruptcy

Both companies’ best chance at success may include a quick and surgical
bankruptcy, according to the administration. Unlike a liquidation or
conventional bankruptcy, a structured process would make it easier for
the companies to clear away liabilities.

The bankruptcy process could be as short as 30 days, and the government
would provide so-called debtor-in-possession financing for the companies
if needed, according to the administration. Still, bankruptcy isn’t the
administration’s first choice, the official said.

To help encourage car sales, the administration will back warranties so
consumers who buy cars during the restructuring have confidence the
guarantees will be honored even if the companies go out of business,
according to the administration.

Edward Montgomery, an economist and former Labor Department deputy
secretary, will be appointed to a new post of Auto Recovery Director to
help communities hurt by job losses in the industry.

On Mar 30, 6:42*am, HK wrote:
GM, Chrysler Must Revamp Plans to Get More U.S. Aid (Update2)

By John Hughes

March 30 (Bloomberg) -- General Motors Corp. and Chrysler LLC must
overhaul their recovery plans with deeper concessions to justify further
taxpayer aid, and bankruptcy may ultimately be their best chance, an
Obama administration official said.

The administration demanded the resignation of GM Chief Executive
Officer Rick Wagoner, and the company said he will be replaced by Fritz
Henderson, its president and chief operating officer. GM will also
replace most of its board and must increase reliance on producing more
fuel-efficient vehicles, under findings to be announced today at the
White House by President Barack Obama.

Chrysler will get $6 billion in aid only if it completes a partnership
with Italian carmaker Fiat SpA in 30 days, said the administration
official, who spoke to reporters and declined to be identified before
Obama presents the decision. Unless it combines with Fiat, Chrysler
won’t get any more U.S. help because it isn’t viable as a stand-alone
company, the administration found.

Auburn Hills, Michigan-based Chrysler values its proposed technology
sharing with Turin-based Fiat at $8 billion to $10 billion. Assuming the
accord between the two companies is approved, Fiat will produce its
first model with Chrysler in 2011, Fiat CEO Sergio Marchionne has said.

Detroit-based GM sought as much as $16.6 billion in additional aid after
receiving $13.4 billion since December. Chrysler sought $5 billion after
receiving $4 billion. Both had to show progress by the end of this month
in matters such as GM’s need to reduce unsecured debt by two-thirds.

Shares Plunge

General Motors fell as much as 57 cents, or 21 percent, to 2.15 euros
and was down 15 percent as of 10:18 a.m. in Frankfurt. The stock has
plunged 22.6 percent this year in Germany. GM tumbled 87 percent in New
York Stock Exchange composite trading last year, the most among the 30
stocks in the Dow Jones Industrial Average.

Neither company completed the tasks, the administration official said.
The aid plans submitted to the government Feb. 17 don’t warrant
additional assistance, the administration concluded. GM’s plan to cut
unsecured debt by two-thirds wasn’t sufficient, and Chrysler’s debt was
far beyond what the company could sustain, the official said.

GM’s plan wouldn’t lead to success even in an improved economy, the
administration found. The new strategy sought by the administration
would focus on sustainable profit and significant changes in brands,
workforce, nameplates and the retail network. Board member Kent Kresa
will serve as GM’s interim chairman.

Kresa is a former chairman and chief executive of Northrop Grumman
Corp., the third-largest U.S. defense company. He is also chairman of
Avery Dennison Corp., which develops self adhesives for consumer products..

Kresa, Henderson Comment

It’s “not yet known” who the board will nominate to constitute the new
majority of directors at the next annual meeting, Kresa said in a
statement posted on GM’s Web site. Wagoner said in a separate statement
that Henderson is “an excellent choice” to replace him and “the ideal
person” to lead the company through restructuring.

GM, which will continue to receive an undisclosed amount of government
aid as it develops a new plan over 60 days, will get greater guidance
from the Treasury and outside advisers in the process than previously,
according to the administration. The government was silent on how much
more aid GM may receive if it devises a successful plan.

Chrysler’s plan included assumptions that were unrealistic or overly
optimistic, according to the administration. Chrysler is being required
to get greater concessions from the United Auto Workers than its plan
requires and must get rid of the vast majority of outstanding secured debt.

wrote in message
...
On Mar 30, 6:42 am, HK wrote:
GM, Chrysler Must Revamp Plans to Get More U.S. Aid (Update2)

By John Hughes

March 30 (Bloomberg) -- General Motors Corp. and Chrysler LLC must
overhaul their recovery plans with deeper concessions to justify further
taxpayer aid, and bankruptcy may ultimately be their best chance, an
Obama administration official said.

The administration demanded the resignation of GM Chief Executive
Officer Rick Wagoner, and the company said he will be replaced by Fritz
Henderson, its president and chief operating officer. GM will also
replace most of its board and must increase reliance on producing more
fuel-efficient vehicles, under findings to be announced today at the
White House by President Barack Obama.

Chrysler will get $6 billion in aid only if it completes a partnership
with Italian carmaker Fiat SpA in 30 days, said the administration
official, who spoke to reporters and declined to be identified before
Obama presents the decision. Unless it combines with Fiat, Chrysler
won’t get any more U.S. help because it isn’t viable as a stand-alone
company, the administration found.

Auburn Hills, Michigan-based Chrysler values its proposed technology
sharing with Turin-based Fiat at $8 billion to $10 billion. Assuming the
accord between the two companies is approved, Fiat will produce its
first model with Chrysler in 2011, Fiat CEO Sergio Marchionne has said.

Detroit-based GM sought as much as $16.6 billion in additional aid after
receiving $13.4 billion since December. Chrysler sought $5 billion after
receiving $4 billion. Both had to show progress by the end of this month
in matters such as GM’s need to reduce unsecured debt by two-thirds.

Shares Plunge

General Motors fell as much as 57 cents, or 21 percent, to 2.15 euros
and was down 15 percent as of 10:18 a.m. in Frankfurt. The stock has
plunged 22.6 percent this year in Germany. GM tumbled 87 percent in New
York Stock Exchange composite trading last year, the most among the 30
stocks in the Dow Jones Industrial Average.

Neither company completed the tasks, the administration official said.
The aid plans submitted to the government Feb. 17 don’t warrant
additional assistance, the administration concluded. GM’s plan to cut
unsecured debt by two-thirds wasn’t sufficient, and Chrysler’s debt was
far beyond what the company could sustain, the official said.

GM’s plan wouldn’t lead to success even in an improved economy, the
administration found. The new strategy sought by the administration
would focus on sustainable profit and significant changes in brands,
workforce, nameplates and the retail network. Board member Kent Kresa
will serve as GM’s interim chairman.

Kresa is a former chairman and chief executive of Northrop Grumman
Corp., the third-largest U.S. defense company. He is also chairman of
Avery Dennison Corp., which develops self adhesives for consumer products.

Kresa, Henderson Comment

It’s “not yet known” who the board will nominate to constitute the new
majority of directors at the next annual meeting, Kresa said in a
statement posted on GM’s Web site. Wagoner said in a separate statement
that Henderson is “an excellent choice” to replace him and “the ideal
person” to lead the company through restructuring.

GM, which will continue to receive an undisclosed amount of government
aid as it develops a new plan over 60 days, will get greater guidance
from the Treasury and outside advisers in the process than previously,
according to the administration. The government was silent on how much
more aid GM may receive if it devises a successful plan.

Chrysler’s plan included assumptions that were unrealistic or overly
optimistic, according to the administration. Chrysler is being required
to get greater concessions from the United Auto Workers than its plan
requires and must get rid of the vast majority of outstanding secured
debt.

The government will support Chrysler for 30 days as it attempts to make
final its agreement with Fiat. Chrysler has proposed giving Fiat a 35
percent stake in the company.

Chrysler Corp., as it was known then, took out $1.2 billion in
government-backed loans in 1980 and repaid the money in 1983.

Quick Bankruptcy

Both companies’ best chance at success may include a quick and surgical
bankruptcy, according to the administration. Unlike a liquidation or
conventional bankruptcy, a structured process would make it easier for
the companies to clear away liabilities.

The bankruptcy process could be as short as 30 days, and the government
would provide so-called debtor-in-possession financing for the companies
if needed, according to the administration. Still, bankruptcy isn’t the
administration’s first choice, the official said.

To help encourage car sales, the administration will back warranties so
consumers who buy cars during the restructuring have confidence the
guarantees will be honored even if the companies go out of business,
according to the administration.

Edward Montgomery, an economist and former Labor Department deputy
secretary, will be appointed to a new post of Auto Recovery Director to
help communities hurt by job losses in the industry.

What's an "Unheaval", mister professional writer?

Government Motors of the USSR.

GM is set to open down 18%. Bet it doesn't stop there. Anyone know how to
place shorts? Can do the match with detail? Never placed one yet, but
suspect in GMs case the shorts are the only winners on GM.

Canuck57 wrote:
wrote in message
...
On Mar 30, 6:42 am, HK wrote:
GM, Chrysler Must Revamp Plans to Get More U.S. Aid (Update2)

By John Hughes

March 30 (Bloomberg) -- General Motors Corp. and Chrysler LLC must
overhaul their recovery plans with deeper concessions to justify further
taxpayer aid, and bankruptcy may ultimately be their best chance, an
Obama administration official said.

The administration demanded the resignation of GM Chief Executive
Officer Rick Wagoner, and the company said he will be replaced by Fritz
Henderson, its president and chief operating officer. GM will also
replace most of its board and must increase reliance on producing more
fuel-efficient vehicles, under findings to be announced today at the
White House by President Barack Obama.

Chrysler will get $6 billion in aid only if it completes a partnership
with Italian carmaker Fiat SpA in 30 days, said the administration
official, who spoke to reporters and declined to be identified before
Obama presents the decision. Unless it combines with Fiat, Chrysler
won’t get any more U.S. help because it isn’t viable as a stand-alone
company, the administration found.

Auburn Hills, Michigan-based Chrysler values its proposed technology
sharing with Turin-based Fiat at $8 billion to $10 billion. Assuming the
accord between the two companies is approved, Fiat will produce its
first model with Chrysler in 2011, Fiat CEO Sergio Marchionne has said.

Detroit-based GM sought as much as $16.6 billion in additional aid after
receiving $13.4 billion since December. Chrysler sought $5 billion after
receiving $4 billion. Both had to show progress by the end of this month
in matters such as GM’s need to reduce unsecured debt by two-thirds.

Shares Plunge

General Motors fell as much as 57 cents, or 21 percent, to 2.15 euros
and was down 15 percent as of 10:18 a.m. in Frankfurt. The stock has
plunged 22.6 percent this year in Germany. GM tumbled 87 percent in New
York Stock Exchange composite trading last year, the most among the 30
stocks in the Dow Jones Industrial Average.

Neither company completed the tasks, the administration official said.
The aid plans submitted to the government Feb. 17 don’t warrant
additional assistance, the administration concluded. GM’s plan to cut
unsecured debt by two-thirds wasn’t sufficient, and Chrysler’s debt was
far beyond what the company could sustain, the official said.

GM’s plan wouldn’t lead to success even in an improved economy, the
administration found. The new strategy sought by the administration
would focus on sustainable profit and significant changes in brands,
workforce, nameplates and the retail network. Board member Kent Kresa
will serve as GM’s interim chairman.

Kresa is a former chairman and chief executive of Northrop Grumman
Corp., the third-largest U.S. defense company. He is also chairman of
Avery Dennison Corp., which develops self adhesives for consumer products.

Kresa, Henderson Comment

It’s “not yet known” who the board will nominate to constitute the new
majority of directors at the next annual meeting, Kresa said in a
statement posted on GM’s Web site. Wagoner said in a separate statement
that Henderson is “an excellent choice” to replace him and “the ideal
person” to lead the company through restructuring.

GM, which will continue to receive an undisclosed amount of government
aid as it develops a new plan over 60 days, will get greater guidance
from the Treasury and outside advisers in the process than previously,
according to the administration. The government was silent on how much
more aid GM may receive if it devises a successful plan.

Chrysler’s plan included assumptions that were unrealistic or overly
optimistic, according to the administration. Chrysler is being required
to get greater concessions from the United Auto Workers than its plan
requires and must get rid of the vast majority of outstanding secured
debt.

The government will support Chrysler for 30 days as it attempts to make
final its agreement with Fiat. Chrysler has proposed giving Fiat a 35
percent stake in the company.

Chrysler Corp., as it was known then, took out $1.2 billion in
government-backed loans in 1980 and repaid the money in 1983.

Quick Bankruptcy

Both companies’ best chance at success may include a quick and surgical
bankruptcy, according to the administration. Unlike a liquidation or
conventional bankruptcy, a structured process would make it easier for
the companies to clear away liabilities.

The bankruptcy process could be as short as 30 days, and the government
would provide so-called debtor-in-possession financing for the companies
if needed, according to the administration. Still, bankruptcy isn’t the
administration’s first choice, the official said.

To help encourage car sales, the administration will back warranties so
consumers who buy cars during the restructuring have confidence the
guarantees will be honored even if the companies go out of business,
according to the administration.

Edward Montgomery, an economist and former Labor Department deputy
secretary, will be appointed to a new post of Auto Recovery Director to
help communities hurt by job losses in the industry.

What's an "Unheaval", mister professional writer?

Government Motors of the USSR.

GM is set to open down 18%. Bet it doesn't stop there. Anyone know how to
place shorts? Can do the match with detail? Never placed one yet, but
suspect in GMs case the shorts are the only winners on GM.



Damned company ought to be delisted. It is worthless.

"HK" wrote in message
m...



Damned company ought to be delisted. It is worthless.


Weren't you in favor of keeping them alive not long ago in the best
interests of the union workers who would become otherwise unemployed, not to
speak of certain loss of retirement benefits?

I keep repeating myself. Chapter 11 is the way to go. It would allow
renegotiation of *all* contracts including debt, suppliers and union under
the guidance of a federal bankruptcy court to ensure fairness.

It also appears that the White House is finally coming around to the same
conclusion.

Eisboch

Eisboch wrote:

"HK" wrote in message
m...



Damned company ought to be delisted. It is worthless.


Weren't you in favor of keeping them alive not long ago in the best
interests of the union workers who would become otherwise unemployed,
not to speak of certain loss of retirement benefits?

I keep repeating myself. Chapter 11 is the way to go. It would allow
renegotiation of *all* contracts including debt, suppliers and union
under the guidance of a federal bankruptcy court to ensure fairness.

It also appears that the White House is finally coming around to the
same conclusion.

Eisboch


Delisting is not the same as killing.

Oh...and the unions already offered up tremendous concessions.

GM needs massive restructuring with an entirely new management team. The
corporate bozos in there now need to go.

"HK" wrote in message
m...
Eisboch wrote:

"HK" wrote in message
m...



Damned company ought to be delisted. It is worthless.


Weren't you in favor of keeping them alive not long ago in the best
interests of the union workers who would become otherwise unemployed, not
to speak of certain loss of retirement benefits?

I keep repeating myself. Chapter 11 is the way to go. It would allow
renegotiation of *all* contracts including debt, suppliers and union
under the guidance of a federal bankruptcy court to ensure fairness.

It also appears that the White House is finally coming around to the same
conclusion.

Eisboch


Delisting is not the same as killing.

Oh...and the unions already offered up tremendous concessions.

GM needs massive restructuring with an entirely new management team. The
corporate bozos in there now need to go.



Assuming GM is to continue as a going concern, what possible benefit is
there to delisting?
It's too bloated to be a private corporation ..... look at Chrysler.
Chrysler is a fraction of the size of GM and, as a privately held
corporation, is the most unlikely to survive. Chrysler's death spiral
started over a decade ago.

Someone made the quip recently that GM is really a health care company that
builds cars in an attempt to support itself. All the existing contracts
with everybody they do business with, including the unions, need to be torn
up and renegotiated

Eisboch wrote:

"HK" wrote in message
m...
Eisboch wrote:

"HK" wrote in message
m...



Damned company ought to be delisted. It is worthless.


Weren't you in favor of keeping them alive not long ago in the best
interests of the union workers who would become otherwise unemployed,
not to speak of certain loss of retirement benefits?

I keep repeating myself. Chapter 11 is the way to go. It would
allow renegotiation of *all* contracts including debt, suppliers and
union under the guidance of a federal bankruptcy court to ensure
fairness.

It also appears that the White House is finally coming around to the
same conclusion.

Eisboch


Delisting is not the same as killing.

Oh...and the unions already offered up tremendous concessions.

GM needs massive restructuring with an entirely new management team.
The corporate bozos in there now need to go.



Assuming GM is to continue as a going concern, what possible benefit is
there to delisting?
It's too bloated to be a private corporation ..... look at Chrysler.
Chrysler is a fraction of the size of GM and, as a privately held
corporation, is the most unlikely to survive. Chrysler's death spiral
started over a decade ago.

Someone made the quip recently that GM is really a health care company
that builds cars in an attempt to support itself. All the existing
contracts with everybody they do business with, including the unions,
need to be torn up and renegotiated



I'm all in favor of a national health care plan for auto workers.

"HK" wrote in message
m...


I'm all in favor of a national health care plan for auto workers.

So am I, but not just for auto workers. And not run by the government.
It needs to affordable, provide quality care, and not a outlandish financial
burden on companies.

In fact, companies shouldn't be in the business of being health care
administrators, period.

Eisboch

On Mon, 30 Mar 2009 11:51:25 -0400, "Eisboch"
wrote:

All the existing contracts
with everybody they do business with, including the unions, need to be torn
up and renegotiated

Unfortunately that is probably going to be politically unacceptable.
GM could have done it on their own but now that the donkey has its
nose in the tent it seems unlikely to me. They will end up being a
government welfare agency that also makes cars.