GM Gets SEC Request, Details Delphi Exposure

[Buickman]

Reuters
UPDATED: 5/24/07 11:30 A.M.

DETROIT (Reuters) -- General Motors said today that U.S. securities regulators had requested documents relating to its accounting for financial hedges and said a parallel inquiry at its former finance arm could force the automaker to restate past results again.

GM also said in a filing with the U.S. Securities and Exchange Commission that it had set its estimated exposure to Delphi Corp. at $7 billion and could take a $1 billion charge this quarter related to the restructuring of its former subsidiary.

The SEC's request for information marked the latest accounting setback for GM, which pledged to tighten its financial controls after twice restating results and delaying its fourth-quarter report.

Separately, GM said that a sale of subsidiary Allison Transmission was now "probable" but that a transaction remained subject to union, regulatory and other approvals. GM had announced in January that it was looking to sell the unit.

Blackstone Group, Centerbridge Capital Partners and Carlyle Group are among the other buyout firms said to be interested in the Indianapolis-based division, which makes transmissions and hybrid systems for trucks, buses and military vehicles.

Lehman Brothers analyst Brian Johnson said in a note that GM could raise more than $3 billion from an Allison sale.

GM spokeswoman Renee Rashid-Merem said the automaker was cooperating with the SEC in its accounting inquiry.

The company also said in its filing that it could be forced to restate results because of a similar SEC review of past hedge accounting at GMAC, now 51 percent owned by Cerberus Capital Management.

The automaker filed its annual report in March after a six-week delay, which it blamed on repeated accounting errors, and said its internal controls on financial reporting had been ineffective. The company appointed a new controller and chief accounting officer last year.

GM, which has stopped providing financial forecasts, is in the middle of a restructuring effort that focuses on cutting costs and improving cash flow. It has eliminated more than 34,000 jobs and is closing 12 plants.

DELPHI DEAL

Some analysts have suggested that Delphi, GM and the UAW union are nearing a deal that would allow the auto parts supplier to emerge from bankruptcy with lower wage rates and financial support from GM, its largest customer.

GM said in its filing today that it had received proposals from Delphi and the union on the automaker's role in Delphi's restructuring.

In addition, the automaker narrowed its estimate of its exposure related to Delphi to $7 billion from a previous range of between $6 billion and $7.5 billion.

"We have taken a $6 billion charge to date," Rashid-Merem said. "In order to hit that $7 billion, we would potentially take an additional $1 billion charge in the second quarter."

Rashid-Merem declined comment on when a deal was expected to be reached but said that GM's move to a specific $7 billion exposure target was an "indicator of where we are."

[slbviper]

NO!! Don't sell Allison Transmission.

What's next? Let sell all of our office buildings and Lease them back. Geesh!

GM HQ becomes the Blackstone building

Fire accountants, hire more designers and engineers. Maybe GM should hire some chinese accountants, because the ones they currently have stink!!

[VibenPontiac]

Here we go again...more doom and gloom.

I'll get it out the way for you both Buickman and VCDJ...

"GM is going bankrupt because they are selling their assets...that is why GM will fail and why rick and bob need to go...GM don't make fuel efficient cars and only focus on big trucks...GM does not know anything...GM does not use its hybrid technology the way they should...blah...blah...blah"

There you go no need to post now...

[TAMark]

Let me give all you an example of the human carnage going on in regard to Delphi. A friend spent his entire career as an engineer at Fisher Guide. GM sold them several years ago. His retirement got lumped in with Delphi even though he never worked a day for them. Just recently he gets a letter in the mail indicating effective immediately his medical insurance was terminated. End of story since there is no union to represent him. He is so mad at GM that he just bought a Honda car and says he'll never buy a GM product again. Its really sad.

[Havasavana]

There are just too many financial 'errors' that have persisted for too long which are too similar to those of companies that have previously gone under. Selling GMAC didn't produce the funds GM hoped for, but, given the tanking of the real estate sector, what had been a cash cow might have been more of a burden if GM still had it all. There's no way of looking at the Allison sale other than an act of desperation; selling the future to satisfy a near-term emergency. Like people who use those payday advance outfits. Pure desperation.

For sick humor we need a monthly spin on GM's finances like we get each month regarding their sales. Tell us about the positives of not being able to balance the books, predict earnings, and explain selling the furniture.

What makes Buickman such a pain to some is that he makes too much sense.

[Chaz_23]

So where are these 6 + 1 billion going???!??? All of this ain't right. Someone is making a whole lot of money at the expense of GM and it's workers.

[Firebird00]

Not one mention of the $10billion shortfall in 2005? What the hell? I'm so disappointed

[kknobl]

Doh!

[racy]

Originally Posted by VibenPontiac

Here we go again...more doom and gloom.

I'll get it out the way for you both Buickman and VCDJ...

"GM is going bankrupt because they are selling their assets...that is why GM will fail and why rick and bob need to go...GM don't make fuel efficient cars and only focus on big trucks...GM does not know anything...GM does not use its hybrid technology the way they should...blah...blah...blah"

There you go no need to post now...

And where are the lies in any of the above statements? If this is the complaint against the Buickman crowd, then lump me in with them.

Since when was it a crime to critique GM? And just who is more of an annoyance: The yahoo who sees nothing wrong with GM, or the frustrated enthusiast who points out all of GM's failures?

Of all the people on this board, you'll have trouble finding a truer GM fan than Buickman. He is so friggin in love with GM that it kills him to watch as a company comits suicide the same way a parent agonizes over the suicide of a child.

Change doesn't happen when the minions point out how lovely the Emperor's clothes appear.

[redimpss5]

With all the diesel guy's raving about the Allison, why would they sell it?

[Havasavana]

Originally Posted by redimpss5

With all the diesel guy's raving about the Allison, why would they sell it?

They REALLY need the money now.

[asim]

Originally Posted by slbviper

NO!! Don't sell Allison Transmission.

What's next? Let sell all of our office buildings and Lease them back. Geesh!

GM HQ becomes the Blackstone building

Fire accountants, hire more designers and engineers. Maybe GM should hire some chinese accountants, because the ones they currently have stink!!

Lol they could make it worse and just fire Bob Lutz and Rick Wagoner. haha.

Just kidding. Please don't GM.

[TKR]

Originally Posted by racy

And where are the lies in any of the above statements? If this is the complaint against the Buickman crowd, then lump me in with them.

Since when was it a crime to critique GM? And just who is more of an annoyance: The yahoo who sees nothing wrong with GM, or the frustrated enthusiast who points out all of GM's failures?

Of all the people on this board, you'll have trouble finding a truer GM fan than Buickman. He is so friggin in love with GM that it kills him to watch as a company comits suicide the same way a parent agonizes over the suicide of a child.

Change doesn't happen when the minions point out how lovely the Emperor's clothes appear.

The mere fact that GM products are finally getting good reviews should be an indication that they are heading in the right direction. The problem with Buickman etc is that all they do is bash Rick and Bob but the origins of the problems GM are having at present go a lot further back than when these 2 appeared on the scene for GM. I agree that critism is due when things are handled wrong but from where I am sitting GM is starting to do a lot right. It will take a long time to bring some much needed respect back to the brand but better late than never.
I can't believe how many comments have been posted from people like Buickman about how bad or how wrong for the market new GM vehicles are before people have even seen them ,driven them or sales results have come through. And yes, even the mighty Toyota is still using 4 speed autos.

[VibenPontiac]

Originally Posted by racy

And where are the lies in any of the above statements? If this is the complaint against the Buickman crowd, then lump me in with them.

Since when was it a crime to critique GM? And just who is more of an annoyance: The yahoo who sees nothing wrong with GM, or the frustrated enthusiast who points out all of GM's failures?

Of all the people on this board, you'll have trouble finding a truer GM fan than Buickman. He is so friggin in love with GM that it kills him to watch as a company comits suicide the same way a parent agonizes over the suicide of a child.

Change doesn't happen when the minions point out how lovely the Emperor's clothes appear.

I'm not saying you shouldn't criticize GM...GM clearly still has issues to sort out. What I am saying is that the doom and gloom is no where near as bad as a lot of the critics say it is, and that the spiel coming from VCDJ and Buickman never changes despite the fact that a basic look at the financials and product coming out/that is out already clearly demonstrates GM has turned the corner. That been said I do believe GM still has a ways to go. Marketing, as Buickman points out, is a huge problem, and stories like this only perpetuate the misnomer that GM is a house of tumbling cards. My major problem is that more often than not the "criticism" coming from folks like VCDJ and Buickman is blind and devoid of any serious thought of the good things that GM is doing..."GM can do no right" is the mantra. And before you call me a fanboy again, I also have a problem with people who seem to think GM can do no wrong - clearly they can

[racy]

Originally Posted by VibenPontiac

I'm not saying you shouldn't criticize GM...GM clearly still has issues to sort out. What I am saying is that the doom and gloom is no where near as bad as a lot of the critics say it is, and that the spiel coming from VCDJ and Buickman never changes despite the fact that a basic look at the financials and product coming out/that is out already clearly demonstrates GM has turned the corner. That been said I do believe GM still has a ways to go. Marketing, as Buickman points out, is a huge problem, and stories like this only perpetuate the misnomer that GM is a house of tumbling cards. My major problem is that more often than not the "criticism" coming from folks like VCDJ and Buickman is blind and devoid of any serious thought of the good things that GM is doing..."GM can do no right" is the mantra. And before you call me a fanboy again, I also have a problem with people who seem to think GM can do no wrong - clearly they can

Actually I wasn't trying to imply you were a fanboy Sorry if you got that impression.

Both you and TKR make a point which is well taken, and which myself and others don't acknowledge enough: GM is indeed improving on many fronts. This is true and undisputable. But is it too little, too late? From a business standpoint, Rick and Bob are doing some major overhaulin'. But are the things they do fully relevent in today's car market? Do business tactics appropriate for the market 25 years ago, apply to today's environment? Are they make enough changes and fast enough? These are the questions that bother me. For every good piece of GM news, we read 3 bad pieces. I'll say it again, it is extremely difficult being a GM fan.