And why wouldn’t they? As attractive as 30 cents on the dollar for equity in a firm that has five frantic days to produce a viability plan is, there seems to be some . . . hesitation. The Detroit News reports that GM is trying to finagle a $9.2b debt for equity swap with the holders of its unsecured debt to fulfill the requirements for federal loans. According to the usual anonymous sources, bondholders are holding out for 50 cents on the dollar. They say the figure mirrors the value of concessions being negotiated with the United Auto Workers. (Sound familiar?) Luckily bondholders seem to have an ingenious solution for the UAW-bondholder deadlock: the government could just lend GM more money. This is some seriously high-stakes poker.

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The more tax money GM asks for the more it seems to need. Starting at home, it had come to the attention of our elected leaders that their $13.4 billion bailout of GM would bump GM’s tax liability by $7-$10 billion dollars. Specifically, the loan terms (new equity structure) would have constituted a “change in ownership,” potentially triggering the massive tax bill under terms set to prevent companies from merging to avoid tax liability. Luckily for GM, the new compromise stimulus bill exempts TARP-receiving firms from these ownership requirements, reports MLive. Good luck digging through the 778-page bill to find the exact wording, though. Meanwhile, we’re still waiting on word from the International Swaps and Derivatives Association as to whether these same equity structure changes and government regulations will trigger GM’s default swaps. And while DC kisses $7-$10 billion in potential GM tax revenue goodbye (which should be reflected in the total bailout cost), GM has already moved on to the next trough.

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Well good for them. As we said at the time, when used responsibly, a private jet is an invaluable management tool. An executive lording it over a far-flung empire can use private transpo to gather otherwise unobtainable on-the-ground intelligence. (Body language is 65.7 percent of all human communication.) Not to mention instilling the fear of God by all-of-a-sudden showing-up amongst his or her minions. Of course, as far as we know, and they ain’t sayin’ nothin’ (surprise!), that justifiable jet set savvy doesn’t apply to Chrysler, Ford or GM.

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It may be a groaner, but it’s oh so true. Kia’s replacement for its aging Spectra is a cleanly-styled, classy little sedan that looks more Civic than, say, Optima. Already available in Korea and coming to the US this summer, the Forte is about an inch longer and an inch and a half wider than the the Spectra it replaces. According to Automotive News [sub], base engine is a two liter four-pot, making 156 hp and 144 twisties of torque and mated to a five-speed manual or four-speed automatic. Upgrade to the SX trim level, and you get a 2.4 liter engine with 173 hp and 168 lb·ft, and a standard six-speed manual standard or five-speed slushbox. Which probably has visions of Forte Coupe hoonage dancing through your head. Well you can just forget it.

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New twist in the SAIC buying GM saga (and fair warnings to TTAC’s admins to allocate extra bandwidth). We’ve said all along that SAIC had designs on GM’s assets. That they would just wait until the time—make that until the price—is right. Well, the time is right. GM has until Tuesday to submit a new restructuring plan to the U.S. government detailing its progress cutting costs, shoring up its balance sheet and figuring out a way Fordward [sic]. So the time has never been righter, and the price is most likely commensurate. With all other deals failing, GM is getting ready to sell their crown jewels: their China operation.

Despite constant denials, General Motors has held talks with China’s SAIC Motor Corp about selling part of its stake in their joint venture or other assets as the U.S. automaker, Reuters reports. GM needs the cash, STAT. According to Reuters, GM approached SAIC Motor in recent weeks with an offer to sell some of its stake in their 50-50 joint venture that builds and markets Buick, Cadillac and Chevrolet models in China. And why would they do that?
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How much fun are those back seats going to be? Tesla plans to fully reveal the Model S and its spec sheet on March 26, “by which time Tesla hopes to have a final decision on its DOE loan application so that they can make other announcements about production,” according to Autoblog. Or not. Etcetera.

Back to this morning’s wildly exaggerated rumors of GM’s resurrection, via today’s USA Today. After Wagoner has his Annie solo, Sharon Silke Carty (I ordered one of those for my wife for Valentine’s Day!) offers a prescription for GM’s Return to Greatness. The fact that the list doesn’t come from Wagoner is, perhaps, the most irrefutable evidence of the CEO’s incompetence ever not documented (if you know what I mean). Top of the list, in bold and all: More federal loans. Need I say any more? I thought not. But just for SAG: More customers. “‘We’re hearing that people are paying attention to us,’ says Mark LaNeve, GM’s head of North American sales and marketing. ‘It’s a great opportunity.'” Yup, it’s Marketing Mark up on that cross with Rick. Dealers hoping for salvation would be best advised to look elsewhere. To wit: this, under the helpful topic “More coastal support.” 

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An overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. WAS is being filed from Beijing until further notice.

HUMMER sold to China? General Motors Corp., working to sell assets to help keep $13.4b in US loans, has drawn interest in its HUMMER brand from a Chinese company and a private-equity firm, says Bloomberg [via Gasgoo]. The pace of negotiations has intensified in the past few weeks, said the people, who wouldn’t name the suitors and asked not to be identified because the discussions are private (so there). More meetings are scheduled this week. According to Bloomberg, “unloading the sport-utility vehicle unit would move GM closer to the goal of showing its future viability to the U.S. Treasury by Feb. 17. If the biggest US automaker can’t prove its ability to return to profit, it could be told to give up the loans or use the cash for a government-funded bankruptcy.” Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Michigan, estimates Hummer might fetch $100m or less.

Fallout in Japan: The major production cuts being implemented by Japan’s carmakers are beginning to seriously hurt the finances of their parts suppliers, the Nikkei [sub] writes. Autoparts suppliers and other firms in the industry employ a total 670k workers in Japan, nearly four times as many as those working at domestic carmakers. Says the Nikkei: “If many of them fail, the industry itself could become unsustainable.”

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You may recall Phil as one of our Best and Brightest, a forensic accounting gumshoe hot on the trail of who owns Chrysler. You know, the company that sucked-up $3b of your tax money, looking for $4b more. And the rest (DOE loans and whatnot). Well, Phil outed Franklin Templeton Investments as one of the firms holding Cerberus CNG Investor I – III paper. Phil and I wanted to know a few things about Franklin’s folly. Why did they list the funds under “Consumer Credit” in their annual report? What’s with the Cerberus’ bonds paying 12 percent by 2014? So Phil called Big Ben. And . . . nothing. Despite a promise to answer his questions. So Phil’s not a happy camper. Not at all.

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I don’t know about you, but if I’d earned $14m in ONE YEAR, and I’d worked for the same company for thirty-two years, at least eight of which delivered unto me similarly (if not equally) spectacular amounts of pay and benefits, I wouldn’t really be all that worried about what happened next. OK, yes, reputation and all that. But we’re talking about Rick Wagoner, the man that’s flown the GM jumbo jet straight into the dirt without once recognizing that funny looking thing called the yoke. Any reputation that remains is purely in Rick’s head, and the heads of the sycophants who wear their “Pay No Attention To That Man Behind the Curtain” T-shirts with pride, without irony. So don’t expect me to be surprised that USA Today reports “GM, [Wagoner] says, is crouched and ready to pounce if the auto market begins to rebound. ‘We just need to get the storm over, and we’re about ready to go.'”

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When I was a kid, I really thought debtors could end up in prison. My Dad grew up in Old Europe (pre-WWII) and with memories of German hyperinflation, depression and Nazism came a very firm belief in paying cash . . . no matter what. Conservative isn’t the half of it. He simply can’t stand the very idea of investing in any asset that can only depreciate over time. For the last ten years I embraced the same attitude of “neither a borrower or a lender be.” My customer has always been the ‘cash’ customer. That is until the debtor’s economy hit my fleet of automotive mules with a proverbial 2 × 4.

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“We’re placing a high priority on biofuels right now.” Yeah, right. “Hey guys, how’s that congressional viability plan coming? Shhh. We’re working on biofuels.” The man shilling for last year’s green queen is GM’s vice president of research and development. Lest we forget, Laurence Fishburne—sorry, Larry Burns—was The General’s main eco-warrior a little over a year ago. That’s when GM decided to squander some its precious pre-bailout bucks on buying a big piece of a cellulosic ethanol start-up named Coskata. Hyperbole is a dish best served cold. Looking back . . . USA Today: “General Motors says it is investing in a fledgling company that claims its secret process could be able to make ethanol from waste in large quantity as soon as 2010 for $1 a gallon or less, half the cost of making gasoline.” Just out of curiosity, anyone want to guess how much GM plowed into this turkey?

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