Sent to us from a member of our Best and Brightest, who’s been following former GM parts maker, and bankruptcy-stuck, Delphi’s implosion at an unsafe distance:
One bit of news last night, and two old known facts, that may be the tip of something bigger. 1. As expected, yesterday, Judge Drain extended the hearing on Delphi’s emergence plan until Tuesday, the day after the GM C11 2. The PTFOA [Presidential Task Force on Automobiles] has never said, and still won’t say, what price they are paying for the five US Delphi plants. 3 Platinum Equity has been sticking their nose in here [Delphi] trying to get to FMV for Delphi’s stuff. The first two on this list don’t make sense. The Platinum thing does. Here’s what could be going on . . .
Define “soon.” Unfortunately, no one in federal bankruptcy court nailed that one down as Alfredo Altavilla, Fiat’s head of business development and future Chrysler board member, somehow managed to avoid the kiss of death. This despite Altavilla’s admission that the zombie automaker might not start making automobiles for an indeterminate amount of time. You know, given that the Chrysler dealers who didn’t take a bullet to the head have some 300,000 units sitting on their lots. Of course, it might help to know which units, their age and configuration. But the ChryCo bailout isn’t about selling cars, apparently. According to the Detroit News, all eyes were on soon-to-be-ex-CEO Robert “Run ‘Em Into the Ground” Nardelli. The failed former Home Depot despot “surprised a packed courtroom” when he testified that the whole “new Chrysler” thing’s a done deal, by close of play today [Friday]. The only real surprise: that someone would be surprised that Nardelli is happy to admit that the fix is in. ‘Cause the fix is in. Hang on . . . define “fix.”
After taking plenty o’ heat for “helping” Chrysler and GM shit-can nearly 2000 car dealers, the Obama administration has arranged a little sugar for the remaining stores—and then some. They’ve created a federal loan guarantee program for dealer inventory financing that’s worth, you guessed it, billions. Automotive News [AN, sub] reveals that the Small Business Administration’s “pilot” program for car dealers (women and domestics first?) will run from July 1 to September 30, 2010. And what, pray tell, do the lucky, politically-connected car dealers get for our money?
Automotive News [AN, sub] bears the glad tidings that the Presidential Task Force on Automobiles (PTFOA) has decided how much of your hard-earned money they want to plow into “new” GM: $30 billion. For now. Here’s the deal [as laid down in today’s 8-K SEC filing]: “the $30 billion federal loan would be converted to equity, with $8 billion of the total U.S. funds to be repaid by GM, the officials said. Most of the rest would be converted to equity, with the government initially holding a 72.5 percent stake in the new company. That portion could be reduced to 55 percent if a UAW trust fund and bondholders exercise warrants.” So how much is this boondoggle going to cost me, really?
Bloomberg reports that GM’s scheduled its Chapter 11 filing for Monday, June 1, 2009. And we were wrong about GM’s bankruptcy becoming the world’s largest. Thanks to Ex-CEO’s Rick Wagoner’s decision to throw all of GM’s “non core” assets into the fiery pit of the company’s endless cash burn, the American automaker’s C11 will only rank as number three. “GM’s bankruptcy will be the third-biggest in U.S. history after Lehman Brothers Holdings Inc. and WorldCom Inc., based on GM’s reported global assets of $91 billion and total liabilities of $176.4 billion as of Dec. 31.” Meanwhile, the company has pulled ahead its US white collar workers’ payroll. Apparently (unconfirmed), they’ve already sent out the checks for the week of May 25, 2009. “Other than the date change, all other payroll processes will remain the same in terms of paying employees at work or if they are on layoff,” a leaked memo from Marketing Maven Mark LaNeve reveals. According to the document, “This action is not an indication that GM plans to file for bankruptcy on or about June 1 . . . GM has determined this simple action — moving up the payroll pay date for this month — is the least the company can do to reduce any potential for disruption regardless of what happens.”
Don’t worry: despite the catchy headline, this isn’t going to become a regular TTAC feature. I think. Anyway, pistonheads reports that this tuned estate’s mill generates 585bhp and 509 lb·ft of torque. But wait! There’s more! “The brakes have been upgraded with six-piston callipers and 390mm drilled discs, and a new differential has been added. But the most obvious changes are to the body, on which Vath has spent considerable time and energy creating a new carbon fibre front lip returning 12kg of downforce, large carbon diffuser and carbon side vents. The whole Vath package is rounded off with 20-inch split rims and new Michelin tyres.” No word on price. But if even if you could afford it, would you?
As GM augers-in for its Chapter 11 face plant, the Presidential Task Force on Autos (PTFOA) has been busy cutting back-room deals with bondholders. Reuters reports that the feds are getting their proverbial ducks in a row for a fast-track fustercluck—sorry, reenergized company. “Under the proposed deal, which is supported by major institutional creditors holding about a fifth of its debt, bondholders representing $27 billion in debt would be offered 10 percent of a reorganized GM — the same stake they had been offered previously. In a sweetener, bondholders would also receive warrants to acquire another 15 percent of the equity in the new company, provided they support a quick Treasury-backed sale process similar to one now being used for rival Chrysler.” GM has released a statement on the new plan, removing any last traces of doubt that it’s headed for the world’s largest bankruptcy proceeding . . .
You may remember Malcolm Bricklin as the man who unleashed the Yugo on an unsuspecting American public. Or as the car guy who brought automotive enthusiasts the mid-engined rust bucket known as the Fiat X1/9 (re-badged Bertone). Or, infinitely more forgivably, you might know Malcolm as the entrepreneur who gave Subaru its start stateside. Moving up the car nerd food chain and deep into the realm of delusion, Bricklin’s name is reasonably synonymous with his eponymous car company, Canadian manufacturer of the ill-fated SV-1. For those of you who have never heard of a Pet Rock (and couldn’t imagine why anyone would want one), Bricklin’s broken ass deal to import Chinese Cherys into The Land of the Free (Perkins, IL excepted) may be the freshest factoid. Moving on to today, Malcolm Bricklin has revealed his desire to end his career in ridicule. Which, of course, starts here . . .
The Truth About Cars has come a long way since it had zero readers and zero page views. In the last however many years, we’ve gradually gathered a group of the autoblogosphere’s best and brightest. It is your patronage and engaged, informed and passionate commentary that has kept us honest, and made this site a success. As we prepare for a seminal moment in both the history of this url and the automotive industry, I’d like to offer you some stats on our current status. Not to toot our own horn; but as a thank you to all our “stakeholders.” The readers, writers, editors, investors and techies dedicated to telling the truth about cars. (Not to mention our advertisers.) Suffice it to say, those of us on this side of the WordPress platform will continue to do our level best to stay true to the TTAC brand: providing no-holds-barred automotive news, rants and reviews. [Tweeting all the way.] At the risk of sounding ghoulish, the best is yet to come.
Parts maker Visteon’s US operations have filed for bankruptcy. No surprise there. In the nine years since FoMoCo spun off its vehicle climate systems, interior parts, lighting and electronic systems maker, Visteon has never posted an annual profit. After losing $663 million last year, Visteon warned a few weeks ago that they may have to file if the creditors would not agree to concessions. Nobody conceded. Visteon filed along with some of its US subsidiaries in the US bankruptcy court in Delaware. None of its overseas subsidiaries or joint ventures outside the US are part of the filing. Not that they need any help with it: In March Visteon’s main UK subsidiary filed for reorganization.
In its C11 filing, Visteon listed assets of $4.58 billion against debts of $5.3 billion. This as April sales to Ford, Visteon’s biggest customer, fell 40 percent. Automotive News [sub] reports that the company’s creators will be there for their progeny. “Visteon said Ford has committed to ensure long-term continuity of supply and to support debtor-in-possession (DIP) financing for the restructuring efforts. Ford is still Visteon’s biggest customer and accounted for about 31 percent of its $1.35 billion of sales last quarter.” The question is, can Ford afford another mouth to feed? And with all those bailout billions flowing towards all the other local suppliers, can Ford resist dipping-in for Visteon? If Visteon suckles, does that taint Ford’s non-bailout (Ford family control related) political purity?
The Associated Press called it: GM is set to enter popular parlance as “Government Motors.” When the automaker files for Chapter 11, the nickname will stick, as the debate over GM’s future centers on whether or not the United States government should own a commercial enterprise. To which the only possible answer is no. It was no back when President Bush over-ruled Congress and authorized the first multi-billion dollar “loan.” It’s no now, as the feds prepare to stump-up another $20 billion dollars to keep GM in business. There are lots of reasons why “new” GM is a bad idea. But here’s the most important impediment: Government Motors doesn’t have the vehicles it needs to survive.
TTAC writer Samir Syed was on the lamb last night, cooked by yours truly. To honor the dead sheep’s spirit, Sam brought by a rented Ford Mustang GT. For some reason, I never got ’round to driving Ford’s latest Pony Car, what with the world’s largest bankruptcy looming on the editorial horizon and my step-daughter’s after-school activities ending for the term. Anyway, the car in which I was about to go roaming in the gloaming embodied its designers’ desire to re-infuse the ’Stang with some understated classicism—while attempting to add a bit of visual drama (swage much?). Other than a hideously overwrought rear, there’s nothing particularly wrong with the result. Not to put fine a point on it (so to speak), the new Mustang doesn’t give me wood. Still, personal fertility and automotive blue pill issues aside, there are plenty of reasons to be cheerful.
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