General Motors (GM) Updates Viability Plan, Note Exchange; Current Shareholders To Get 1% Of Restructured Company
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Shares of General Motors (NYSE: GM) are trading slightly higher (+3%) this morning following the company's updated viability plan, which included the phase out of the Pontaic brand, and an exchange offer with note holders.
As part of its plan to rid itself of much of its debt, GM is commencing public exchange offers for $27 billion of its unsecured public notes. GM is offering to exchange 225 shares of GM common stock for each 1,000 U.S. dollar equivalent of principal amount of outstanding notes.
The aggregate amount of GM common stock to be issued to the U.S. Treasury pursuant to the U.S. Treasury debt conversion and to the new VEBA pursuant to the VEBA modifications would represent approximately 89% of the pro forma GM common stock, with the final allocation between the U.S. Treasury and the new VEBA to be determined in the future. Of the remaining pro forma outstanding GM common stock, noteholders would represent approximately 10 percent, and existing GM common stockholders would represent approximately 1 percent.
In the event that GM does not receive prior to June 1, 2009 enough tenders of notes to consummate the exchange offers, GM currently expects to seek relief under the U.S. Bankruptcy Code. GM is considering its alternatives in seeking bankruptcy relief in consultation with the U.S. Treasury, GM's largest lender. If GM seeks bankruptcy relief, noteholders may receive consideration that is less than what is being offered in the exchange offers and it is possible that such holders may receive no consideration at all for their notes.
GM's updated Viability Plan also includes: a focus on four core brands in the U.S. - Chevrolet, Cadillac, Buick and GMC; a more aggressive restructuring of GM's U.S. dealer organization; improved U.S. capacity utilization through accelerated idling and closures of powertrain, stamping, and assembly plants; Lower structural costs, which GM North America (GMNA) projects will enable it to breakeven (on an adjusted EBIT basis) at a U.S. total industry volume of approximately 10 million vehicles, based on the pricing and share assumptions in the plan.
As part of its plan to rid itself of much of its debt, GM is commencing public exchange offers for $27 billion of its unsecured public notes. GM is offering to exchange 225 shares of GM common stock for each 1,000 U.S. dollar equivalent of principal amount of outstanding notes.
The aggregate amount of GM common stock to be issued to the U.S. Treasury pursuant to the U.S. Treasury debt conversion and to the new VEBA pursuant to the VEBA modifications would represent approximately 89% of the pro forma GM common stock, with the final allocation between the U.S. Treasury and the new VEBA to be determined in the future. Of the remaining pro forma outstanding GM common stock, noteholders would represent approximately 10 percent, and existing GM common stockholders would represent approximately 1 percent.
In the event that GM does not receive prior to June 1, 2009 enough tenders of notes to consummate the exchange offers, GM currently expects to seek relief under the U.S. Bankruptcy Code. GM is considering its alternatives in seeking bankruptcy relief in consultation with the U.S. Treasury, GM's largest lender. If GM seeks bankruptcy relief, noteholders may receive consideration that is less than what is being offered in the exchange offers and it is possible that such holders may receive no consideration at all for their notes.
GM's updated Viability Plan also includes: a focus on four core brands in the U.S. - Chevrolet, Cadillac, Buick and GMC; a more aggressive restructuring of GM's U.S. dealer organization; improved U.S. capacity utilization through accelerated idling and closures of powertrain, stamping, and assembly plants; Lower structural costs, which GM North America (GMNA) projects will enable it to breakeven (on an adjusted EBIT basis) at a U.S. total industry volume of approximately 10 million vehicles, based on the pricing and share assumptions in the plan.
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