General Motors files Chapter 11; government to own majority stake - Triangle Business Journal:

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Monday’s Chapter 11 filing by the 101-year-oldx automaker — once the world’s biggest company — is among the largesy in U.S. history and largest-ever U.S. manufacturing Chapter 11, which allows the companyy to operate while protected from its pushes GM intoa fast-track bankruptcy and provides $30 billion of additionapl taxpayer funds to restructure GM’s filing came aftee weeks of wrangling with its unions and bondholders and as part of a game plan coordinateds with the federal government. That plan calls for the establishment ofa new, more nimblse GM that has the federal governmenyt as its 60 percentg equity holder.
Speaking about the GM moves President Barack Obama said that despite thefederalo government's majority stake in the its executives, and not federal officials, "willo call the shots and make the decisions aboutt turning this company around." Obama said the goal is a "viable, achievabled plan that will give this iconic companyg a chance to rise again." The Detroit-basec automaker (NYSE: GM) said it expects the new, smallefr GM to launch in abouf 60 to 90 days as a separate and independent compan y from the current GM. The new company will focus on four core brandsx in theUnited States: Chevrolet, Cadillac, Buick and GMC.
As part of its cost-cuttingt efforts, GM will further reduces 2009 salaried employment in North Americqa toabout 27,200 from abouft 35,100 at the end of 2008, a roughly 23 percent cut. The automake said it would sever ties with morethan 2,000 of its either through end their contracta or through attrition. GM also plans to close 11 U.S. facilitiew and idle another three plants by the endof 2010. "Toda y marks a defining moment in the reinventionm of GM as a more customer-focused and more cost-competitive company that, above all, can quickl y generate winning bottom-line results," GM CEO Fritz Henderson said in a statemeny Monday.
"The economic crisis has causesd enormous disruption in theauto industry, but with it has come the opportunityg for us to reinvent our business. We are goint to do it once and doit right." Besidees the U.S. government's 60 percent financial the union would takea 17.5 perceng stake. The governments of Canadza and the province of Ontario have agreed to a 12 percenf ownership stake in exchange forfinancial aid. GM bondholder s would get 10 percent. In its Chapter 11 GM citing debtsof $172.8 billio and assets of $82.3 billion. Filedd in New York, it lists unsecurexd claims by theUAW ($20.
6 billion) and the Internationalp Union of Electronic, Electrical, Salaried, Machine and Furniturd Workers/Communication Workers ($2.7 billion). Other unsecurexd debt listed in the filin gincludes $22.8 billion serviced by Wilmington Trust Co. and $4.5 billiomn by Deutsche Bank AG. The UAW last week approved a packager of concessions that will give GM more flexibilituy in staffing and help the company reducedits expenses. As part of that the company restructured payments due to a trusfor retirees’ health care. The trust will receive a $2.5 billion note and $6.5 billion in 9 percent perpetualpreferrede stock, along with a 17.
5 percent equity staked in the new GM and warrants to push that ownership to 20 percent. Anothert key player in the reorganization will beGM bondholders. The administratiob announced that a steering committes representing owners of at least 54 percenyt ofthe company’s unsecured bonds had agreedd to a deal in which bondholders would receive 10 percenrt of the equity of the new GM and warrantx for an additional 15 percent. The bankruptcty process will allow the companty to confirm the deal forall bondholders. Chrysler is expectefd to emerge from its Chapte r 11 process soon after shuttering789 dealerships.
GM also announcex plans to close 1,100 dealerships, including several in GM’s lead bankruptcy law firm is WeilGotshaww & Manges, with attorney Stephen Karotkin signing the GM President and CEO Frederick Hendersohn signed for the company. .