In its report on GM’s new new new new new new turnaround plan, Reuters reminds us that GM’s going to the well one more time—before it goes to the well again.
The automaker said it expected to draw another $2.6 billion from the U.S. Treasury before a June 1 deadline set by the Obama administration for it to reach agreements with all of its key stakeholders.
Federal bankruptcy judge Arthur Gonzalez has pulled the trigger on Chrysler’s reorganization. Late last night, Arty cleared the way for the bankrupt automaker to review and accept bids on the company’s assets. Gonzalez said there’s an “urgent need for the sale to be consummated.” What’s more, the bidding process offers the prospect of “a fair and orderly sale.” The ruling extends the bidding deadline by five days, to May 20. One week later, the judge will hold the hearing to approve the sale of assets. Not-so-coincidentally, that’s just three days before GM’s drop deadline for its [theoretical] pre-C11 reorganization.
Many years ago, in the pages of CAR, the inimitable LJK Setright considered this question: Presented with the last gallon of fossil fuel on earth, how would you burn it? The elaborately justified answer: he would spend it flying a “motor glider,” flying from thermal to thermal across the majestic open sky until the last drop was spent. Setright, regrettably, was not an American. Had he been, he would have understood that the proper way to burn the last gallon of fossil fuel would be to dump it into a Ford Super Duty.
General Motors has filed papers with the Securities and Exchange Commission detailing plans for financing the new, “good” GM. If/when realized, the scheme will wipe out GM’s current stock holders. The plan would:
* Increase the number of authorized shares to 62 billion
* Reduce the par value to one cent
* Effect a 100:1 reverse split for the existing shareholders (that’s one cent on a dollar)
May 5, 2009
The Honorable Neil M. Barofsky
Office of the Special Inspector General for the Troubled Assets Relief Program
1500 Pennsylvania Avenue, NW, Suite 1064
Washington, DC 20220Dear Inspector General Barofsky:
Thank you for your work investigating the American International Group, Inc. (AIG) counterparty payments. I appreciate the update you provided me on this audit on April 28.
As we discussed, I am also concerned by the circumstances surrounding the current efforts to resuscitate the American automobile industry. The Department of the Treasury and the Federal Reserve have provided billions of dollars in working capital for General Motors (GM) and Chrysler LLC (Chrysler) while the two firms pursue financial restructuring solutions. While the assistance to Chrysler terminated at the end of April, GM has approximately three weeks left to complete its restructuring before the working capital ends.
2006 Maybach 57S. Sticker when new: $385K. Current mileage: 36k. Current price: $169,900 or . . . less.
Toxicroach clocks in with today’s ChryCo court action. And here’s one from left field: Chrysler FInancial attempts to short-circuit the plan—put forward by the President of the United States no less—to transfer all of the zombie automaker’s business to GMAC. Turns out they would do anything for love, but they won’t do that.
“Chrysler Financial got into the act today, objecting to GMAC providing financing going forward (download pdf here). First, they complained about the celerity of the proceedings. Then they pointed out that Chrysler Financial has liens on, oh, all of the Chrysler product on dealer lots, and that the agreement with the dealers prohibits them from financing through anyone else. Since the dealers are not debtors in bankruptcy, the court can’t really protect them. Chrysler Financial’s remedy: kick GMAC to the the curb, replace them with Chrysler Financial. Failing that, let ChryFi see the terms of the agreement between GMAC and Chrysler proper (which had previously been sealed by the court to protect competitive information). The Non-TARP bondholders also filed a motion to protect their identities because Obama is defaming their reputation! The judge shot that down fast. Looks like we will get to find out who all the non-TARP bondholders are by tomorrow at 10 a.m. (download opinion here).
Oh noes! The UAW did the math on GM and Chrysler’s newest restructuring plans and it’s not pleased at all. Well, with GM’s plan, anyway. Commence angry letter (PDF) to Senator: [blank]!
“Incredibly, between 2010-2014 GM’s restructuring plan also calls for a 98% increase in the number of vehicles it will be importing into the United States from Mexico, Korea, Japan and China, with the number of imports from these countries increasing from 371,547 to 736,743. As a result, the share of GM’s sales in the U.S. market that will be imported from these countries will increase from 15.5% to 23.5%. The overall number of vehicles GM will be importing in 2014 represents the production of four assembly plants, the same number that GM plans to close in the United States.”
In a follow up to E. Niedermeyer’s previous post, details have emerged about the scheme to give rebates to buyers who trade “clunkers” for new, fuel-efficient vehicles. FT.com (Financial Times) reports that the program will cost taxpayers about $4 billion and will spur, according Brian Johnson, an analyst at Barclays Capital, the sale of 3 million units in the “near term” (whatever that means). With the US’ SAAR projected at approximately 9 million, this is a very optimistic prediction.
In German politics or the corporate world, the secret weapon to destroy any progress is the feared “12 point program.” Any similarities to a 12-step program of substance abusers are purely coincidental. Since there is no way that all 12 points will ever be met, the project languishes and dies on its own with nobody having killed it.
The German government has increased the mega-tonnage of its secret weapon and presented Fiat’s Marchionne with a 14-point program as he visited Berlin on Monday to meet government and union officials. His intent: Secure political (and financial) backing by the end of this month for a dream. Marchionne wants to combine Fiat, Chrysler and Opel/Vauxhall to a car group that cranks out more than 7 million units a year and has combined revenues in excess of $100 billion. Second to Toyota. Bigger than Volkswagen. (That should make the plan popular in Germany.) Not so fast:
(Read More…)
How does Marchionne do it? Having paid precisely bupkis for a reorganized “allegedly good Chrysler,” the Fiat CEO is now set to earn his firm $35 million if the deal doesn’t go through. In court filings (via DetN), Chrysler has requested the break-up fee with the following mystifying justification. “Fiat appropriately is the recipient of the proposed breakup because it has pursued and funded all aspects of the Fiat transaction on behalf of purchaser and has itself agreed to substantial commitments for the use of its technology, platforms and distribution network in support of the Fiat transaction and the Fiat alliance.” While taxpayers take an $8B+ bath no matter what. Huh?
Who would have guessed it? As soon as we start reflecting on what exactly this little government foray into the auto sector will cost us, DC goes and prepares to bump up the sum. From ABC News comes a report that Democrat wranglings on the upcoming climate bill have yielded a compromise on forthcoming “cash-for-clunker” provisions. Details are still sketchy, but according to ABC, “under the new agreement, consumers will be able to trade in a “clunker”—a car that gets 18 miles per gallon or less—for a voucher for a new fuel-efficient car. The amount of the voucher will range from $3,500 to $4,500, depending upon the fuel efficiency of the new vehicle.” Want more details? Too bad. All you get for now are the assurances of one John Dingell (D-MI) that “it’s a good agreement. It means sales of autos, it means fuel efficiency and it means progress.” No word on cost to taxpayers, limits, “buy-American” clauses or other potential sources of trouble.
The Detroit News reports that the NHTSA’s upgrade of roof crush strength standards will add $1.4 billion to the cost of new cars industry-wide, but will save 135 lives per year. Based on the NHTSA’s numbers, the costs will come out to about $54 per vehicle in design costs and another $15 to $62 in added fuel costs. In other words, even the NHTSA admits that uprated roof strength tests do trade off with fuel economy.
You know what I mean: it’s so bad, it’s good. And make no mistake about it: Ford’s fiestamovement.com is really bad. Garishly, gloriously, car-crash-by-the-side-of-the-road bad. We’re talking 100 pre-release Fiesta “agents” assigned reality TV show style missions by someone who smokes a large quantity of top shelf cannabis on a regular basis. “Take someone to the ocean who’s never been” [LSD optional?]; “Go to your favorite fast food joint order one of everything and give it away” [heads-up Ford: the days when McDonalds sold three items are well and truly over]; and “Blindfold a friend and take them away” [lawyer on speed dial]. It’s friggin’ endless. And the best/worst bit? ALL the agents blog. Twitter. YouTube. There hasn’t been such a surreal yet completely earnest multimedia agglomeration of [tangentially] auto-related inanity since, well, ever. I’m telling you: Ford has a major hit on its hands here.
Short answer: no. But that doesn’t stop The Detroit News from practically begging the man they say “has accomplished almost everything in the auto industry” to reach for the stars. Er, planets. “We have been offered an opportunity to look at Saturn,” say Penske Automotive Group spokesfolks. But “it’s very premature to assume anything will be done. I can confirm to you that we are looking at it.” And that’s enough to get Motown’s cheerleaders all hot and bothered. Motor Trend‘s pick for Car Czar negotiating with the UAW’s pick for Car Czar (now GM advisor on the Saturn “sale”) negotiating the fate of GM’s best dealer network? Sign me up for that smoke-filled room!
Recent Comments