The No. 1 U.S. auto maker, General Motors Corp., is poised for bankruptcy protection on Monday as a way to seek a rebirth in the wake of a similar move by its rival Chrysler about one month ago.
The GM, with a history of more than 100 years, is set to deliver paperwork for its bankruptcy protection at 8 a.m. EDT (1200 GMT), the largest bankruptcy protection case in the U.S. industrial history, said informed sources who asked not to be named.
The company will name Al Koch, a veteran who specializes in bankruptcy protection reorganization, as the chief reorganization officer to look after separation of a new GM consisting of quality assets from the old GM, whose assets could be sold or liquidated, the sources added.
GM President and CEO Fritz Henderson is expected to hold a media briefing at the GM Building in Manhattan mid-day Monday.
U.S. President Barack Obama will also make a speech about GM's future at that time.
The GM's dependence on powerful, fuel-guzzling sport-utility vehicles and trucks met with a double hit last year when record-high oil prices and then an unprecedented recession restrained demand, forcing the company to resort to bankruptcy protection.
Debt-ridden GM was struggling to strike deals with creditors, a hurdle to a quick bankruptcy protection process in the bankruptcy court.
To date, more than half of GM bondholders have accepted a debt-for-equity exchange offer that would give them a warrant of 15 percent more stake in a reorganized GM.
The new deal won a 54-percent support, according to a statement issued on Sunday by a group of ad hoc institutional bondholders.
Under the new offer, bondholders have a recovery of around 9 cents on the dollar, up from an estimated zero to 5 cents under the previous offer.
Investors holding 27.2 billion U.S. dollars in GM's bond had rejected a swap proposal that would have given them a 10-percent stake in a new GM.
In response, the GM announced in a statement that the U.S. Treasury is "satisfied" with bondholder support, without mentioning whether the support has been enough. Treasury had demanded 90 percent participation from bondholders for the previous offer.
With the 54-percent support representing 14.6 billion dollars ahead of the filing, the court could persuade the rest to follow suit to make the automaker's bankruptcy protection smoother.
In addition, the United Auto Workers (UAW) union ratified a labor deal with the GM last Friday, which will help the company to emerge more quickly from bankruptcy.
Under the deal, a health-care trust for union retirees, known as a Voluntary Employee Beneficiary Association (VEBA), will get a 17.5-percent stake in a reorganized GM and the right to buy an additional 2.5-percent stake.
The new labor agreement will "enable the company to eliminate the wage and benefit gap with its competitors," the GM said.
As a pillar in the U.S. industrial economy, the auto industry plays a key role in jobs creation and the overall economy. Now, with huge money pumped by the government under rescue plans, the auto industry still face the tough challenge in making and marketing better cars to tide over the crisis, analysts said.
Source: Xinhua
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