The New York Times reports that GM will offer 2.5 billion shares of common stock in July 2010, just a year after emerging from government-backed bankruptcy. The news comes from regulatory filings in which GM says it will also begin sharing financial data after the third quarter. The Wall Street Journal voices serious doubts as to whether GM is ready for such an offering, pointing to its weak showing in the current cash-for-clunkers bonanza, falling sales, and product weakness. Meanwhile, PTFOA chair Ron Bloom tells the NYT that a Chrysler IPO is further off. “I don’t think Chrysler’s IPO is a 2010 event,” Mr. Bloom said at the Center For Automotive Research’s conference in Traverse City. “I think it’s a little further off. But again, that will be the board’s judgment.”
Automotive News [sub] reports that Chrysler’s unsecured creditors have requested permission to sue Daimler for gutting Chrysler’s “most valuable assets” during its sale of the company. The request alleges that “unidentified assets” were lost in Daimler’s 2007 sale of Chrysler to Cerberus Capital Management, for which creditors are seeking $3 billion in compensation. If granted, the damages would eclipse the $2 billion granted to secured debtors during Chrysler’s bankruptcy sale. “This is completely without merit and we intend to defend ourselves vigorously,” say Daimler spokespeople, and we can’t help but feel that they have a point. What mythical assets were present for Daimler to squirrel away by the time they sold to Cerberus? Did Daimler mismanage Chrysler? Sure. Did they loot assets? For that to happen, there would have to have been valuable assets in place to begin with. Best of luck with that, Chrysler creditors.
GM and the German government could decide by the end of the week who will take over Opel, Germany’s deputy economics minister Jochen Homann said to Reuters. That’s no improvement.
Wall Street Journal had a little post-BOD meeting chinwag with New GM’s federally-appointed Chairman of the Board. Clearly, Edward E. Whitacre Jr.’s busy not kicking ass and not taking names. Whitacre told the WSJ that “GM’s business plan needs to be ‘tweaked.’ Among areas he cited as needing rapid improvement are advertising, revenue and net income.” Do you have any idea how hard it was not to substitute the word “nipples” for “business plan”? Anyway, “Gaining market share is ‘right there at the top’ of his agenda for Chief Executive Frederick ‘Fritz’ Henderson, Mr. Whitacre said. ‘You clearly don’t want to be in a position of losing market share.'” Thanks for the [unintentional] hat tip to the U.S. taxpayer, but didn’t Eddy get the memo about GM bankrupting itself in the single-minded pursuit of market share? No, he didn’t. Make the jump for the most worrying corporate jingoism since, well, all the other GM BS.
Wall Street Journal reports that GM will be allowed to carry-forward $16 billion in net losses from “Old GM,” creating a massive tax shelter. Normally this isn’t allowed to happen as the tax code has specific provisions to prevent firms from buying other firms strictly for their tax losses. Under normal conditions, tax losses die with the old firm when it completes its bankruptcy proceedings. Not so with GM, which sought preservation of tax losses as part and parcel of its 363 sale. “The result seems to retain the cake while eating it,” says Duke law professor Jeffrey Coyne. “They get to sell quickly and without the many procedural protections because this is not a plan. They get to keep the [net operating losses] using a provision that requires the transfer to happen as part of a plan.” And yet another hidden bailout sneaks through, unlikely to ever appear in a final accounting of the cost of rescuing GM.
So the GM board met last night to decide on Opel’s fate. Did we say yesterday, “You won’t hear a decision?” You won’t. They couldn’t even bring themselves to a recommendation. “General Motors is taking more time to negotiate with Magna and RHJ International over the planned sale of its European arm Opel,” Reuters reports. Anybody surprised? Read More >
This evening, at 6pm local, the board of directors of General Motors will meet and discuss whether they should sell Opel to Magna or to RHJ. You won’t hear a decision. They will have to ask their overlords in Washington first. The German government, which is supposed to finance the deal, doesn’t take the meeting seriously anyway. Tomorrow, Tuesday, the German government will continue talks with both suitors, to get a better deal. When a final decision will be made, is anybody’s guess. “If you ask me what will happen when, then I won’t be able to give you an answer,” said a speaker of the German economics minister to Automobilwoche [sub]. Can anyone?
Good morning, Chairwoman Warren and distinguished members of the Oversight Panel.
Thank you for the opportunity to testify about how GM is reinventing our company and how a new GM will repay our nation’s investment.
Emerging from bankruptcy, we are a new company with less debt, a stronger balance sheet, with the right-sized manufacturing, product and dealer network to match today’s market realities. GM can now direct its full energy and resources to where it should be: on customers, cars and a culture to succeed.
We are grateful for our nation’s support. Without it, we would not have this second chance. Equally important, are the many who have been called to sacrifice in order to create a new GM.
The Wall Street Journal reports that the new federal “pay czar” Kenneth Feinberg is about to cap the execs working for GM, GMAC, Chrysler and Chrysler Financial. Well, restructure or “renegotiate” their salaries, bonuses and benefits. As Dan Rather might say, what’s the frequency, Kenneth? Less obliquely, the four auto industry recipients, all of whom owe their existence to billion dollar blessings from the Troubled Asset Relief Program (TARP), must send Ken new exec pay, perks and bennies guidelines by August 13. At which time the man originally tipped to be President Obama’s Car Czar (mooted by a 25-member task force) will decide whether or not he likes their proposals. If he doesn’t . . .
The longer the decision over the fate of Opel drags on, the messier it gets. Last week, three parties handed in their bids: Magna, RHJ, BAIC. Later in the week, BAIC was kicked out of the race. Remaining: RHJ, darling of GM, and Magna, darling of everybody else. Then, more facts surfaced. They didn’t endear the bidders to the decision-makers. Not at all.
No big surprises in the excruciatingly slow bidding for who will finally take over Opel with the blessing and money of the German government. AFP reports that China’s BAIC has been kicked out of the sluggish race. The field of suitors has been whittled down to Magna and RHJ.
Officially, the race is open and fair. However, it is an open secret that GM favors RHJ, while the German government roots for Magna. GM hopes to be able to buy back a washed, rinsed, and refinanced Opel from a compliant RHJ. Berlin hopes to build a Ribbentropian German/Russian automotive power pact. Says AFP: Read More >
On Monday, July 20, 2009, GM Europe accepts the last and final bids for Opel. Really. Definitely. They mean it. GM will evaluate the bids, choose a favorite, and then go on an arduous show-and-tell tour: Germany’s central government needs to be convinced, the states where Opel has plants need to be convinced, European countries where Opel has plants need to be convinced, the EU Commission needs to give its approval. The US government needs to be consulted. And then it’s up to the trustees to say “Ja” or “Nein.” So what will it be?
OK, not exactly the same. GM’s CEO Fritz Henderson will earn $1.26 million this year, according to New GM SEC filings obtained by the Freep. That’s 27 percent less than he earned in 2008, but a whole lot more than the $1/year that ousted CEO Rick Wagoner was forced to accept. CFO Ray Young will earn $720,000, a 15 percent pay cut. GM’s controller Nicholas Cyprus will take home $522,000, which is eight percent less than he earned last year. Board members will earn $200,000 as a base retainer, plus, if applicable, $10,000 for service as a chair of any board committee; $20,000 for service on the audit committee, and $150,000 as board chairman. That’s unchanged from pre-bailout levels, before GM’s board was also forced to take $1/year as a bailout condition. In other words, the Iaccoca act of the last nine months was just that: an act. Because paying executives is more important than paying back taxpayers. Meanwhile, AutoObserver notes that the executives in charge of winding down old GM will be making $835/hr and $555/hr. Good times.
Want to handicap the bidding war for Opel (and German bailout money)? Then be careful in your choice of news sources.
Germany’s mass-market tabloid BILD today declares that “RHJ is in the lead” for Opel. Magna has only “slim chances” to win. BILD‘s supposed sources are in Berlin’s Ministry of Economics.
Also today, the Wall Street Journal writes: “Germany’s government sent a message to General Motors Co. on Wednesday: If GM sells its European car business to anyone other than Magna International Inc., then Germany might withdraw its offer of state aid.”
Wie bitte?Read More >
GM’s heads of public relations, Steve Harris, and research and development, Larry Burns, have announced their retirements today. Automotive News [sub] spins the move as a “shakeup,” but notes that Harris was already on a contract extension. Burns, meanwhile, is burned at the stake as a hydrogen advocate. Despite Burns’s $1b hydrogen initiative of 2002, “the goal of an economically viable fuel cell vehicle by 2010 foundered on the lack of a national hydrogen fueling system,” notes AN. And as goes the political system, so goes GM. Meanwhile, Group Vice President and General Counsel Bob Osborne also announced he was returning to private practice, while former president of North American operations, Troy Clarke, is still at GM with no job title.
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