Bankruptcy Court Approves GM Asset Sale; 'New GM' To Emerge

July 6, 2009 7:25 AM EDT

General Motors (OTC: GMGMQ) (NYSE: GM) the U.S. Bankruptcy Court for the Southern District of New York approved the sale of substantially all of General Motors Corporation's assets to NGMCO, Inc., an entity funded by the U.S. Department of the Treasury. In connection with the closing of the sale transaction, NGMCO, Inc. will change its name to General Motors Company and continue to operate under GM's historic corporate and sub brands. The approval marks another step toward the launch of an independent new GM.

The new GM's common stock will be owned by:

• U.S. Department of the Treasury: 60.8 percent
  
• UAW Retiree Medical Benefits Trust: 17.5 percent
  
• Canada and Ontario governments: 11.7 percent
  
• The old GM: 10 percent

Additionally, the old GM and the UAW Retiree Medical Benefits Trust will hold warrants that are exercisable for 15 percent and 2.5 percent of the interests in the new GM, respectively.

The UAW Retiree Medical Benefits Trust and the Canadian government each may nominate one member to serve on the board of the new GM. The retiree benefits trust has selected seasoned auto industry analyst Stephen Girsky. Also selected to serve on the board of directors of the new GM are six current members of the General Motors Corporation board, including Erroll Davis, Neville Isdell, Kent Kresa, Philip Laskawy, Kathryn Marinello and Fritz Henderson. The Canadian government representative and four additional board members to be identified by the U.S. Treasury will be announced at a later date.

Judge Gerber's order includes a four-day stay before closing of the sale can occur. However, GM expects the sale to close in the near future.

In connection with the closing, the current General Motors Corporation will change its name to Motors Liquidation Company. Retained assets will be wound down or sold. A new board of directors will oversee that process and the liquidation of the company under the supervision of the Bankruptcy Court.

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