GM Bankruptcy Update; 363 Sale set for June 30th
GMI hears the target date for a critical chapter of GM's bankruptcy.
www.gminsidenews.com
June 11, 2009
By: Nsap
In one of the largest industrial bankruptcies in U.S. history, General Motors has now been in court for just over ten days and overall things have been quiet about the progress of getting the General reorganized. GMI does have the latest information to come out of the bankruptcy hearings and the latest evolution of the bankruptcy plan; a plan that has not really changed much at all since the filing. Amongst the latest information, GMI has been told a critical date in the bankruptcy process.
One of the most critical processes of GM's bankruptcy proceedings is the final sale of "New GM" to the U.S Government. In this process creditors bid for New GM and it is expected, with little doubt, that the U.S. Government will issue the largest bid for New GM. The entire process is part of a 363 sale in the U.S. bankruptcy code. GMI has been told that sale could happen as early as June 30th. That date is contingent that no appeals or rejections are made to the process (which are looking likely), as such issues may delay the sale of New GM. Finalizing the actual sale does not mean New GM will be emerging from court on June 30th.
GMI has also been told that New GM's debt load after emerging from court will be around $9 Billion. $7.7 Billion of that to the U.S. Government to recover some of the TARP money issued to former General Motors and $1.3 Billion to the Canadian government for their loan contributions to General Motors while in bankruptcy. The remainder of GM's debt to the U.S. and Canadian governments will be (attempted to be) recovered through both governments having ownership stakes in the New GM. In addition to the $9 Billion, GM does expect to get CAFE loans from the Department of Energy once they emerge from bankruptcy, which will add to GM's debt load. All automakers can apply for CAFE loans and the money must be used toward the research and development of advanced technology vehicles to improve fuel efficiency.
As GMI has already reported, once New GM is stabilized and the government feels they can make a sufficient return on their investment, they will issue an Initial Public Offering (IPO) on New GM on the NYSE. GMI is hearing that the projection for the IPO is mid to late 2010. At that point government ownership of New GM will be dramatically reduced. During 2010 and 2011 New GM is expected to have a fairly sizable product offensive, mainly in small cars. The Chevrolet Spark, 2011 Chevrolet Aveo (Viva), Chevrolet Cruze, Chevrolet Volt, Chevrolet sub-compact crossover, Chevrolet MPV (Orlando-based), all-new Chevrolet Malibu, all-new Chevrolet Colorado, all-new GMC Canyon, 2011 Buick Regal and 2011 Cadillac CTS Coupe will all be launching in the 2010 to early 2011 time frame.