General Motors (GM) is making "intense" and "earnest" preparations for bankruptcy, which is now seen as the best option, according to a source familiar with the company's plans. The company is operating under a June deadline from the U.S. Treasury to reduce debt and slash costs as part of its $13.4 billion loan and request for an additional $16.6 billion.
It appears the plan to split the company in two is gaining momentum. Known as a "363 sale" because of the relevant section of the Chapter 11 bankruptcy code, this would see GM divided into one company containing healthy brands like Chevrolet and Cadillac and another holding troubled units like Hummer, Pontiac, and Saturn.
It appears the plan to split the company in two is gaining momentum. Known as a "363 sale" because of the relevant section of the Chapter 11 bankruptcy code, this would see GM divided into one company containing healthy brands like Chevrolet and Cadillac and another holding troubled units like Hummer, Pontiac, and Saturn.
Under the new plan, Hummer would actually be owned by an outside investor, but the H3 would continue to be made by GM at the Shreveport plant. What is still unclear is what would happen to the AM General H2 plant in Indiana if an outside buyer takes over Hummer. It is doubtful that the new owner of Hummer would would deal with GM instead of directly with AM General. Then you have to consider the future of the H1 Alpha which has been quietly left out of all press reports. The only thing that is for sure according to a GM insider is that Hummer will be sold to an outside bidder and GM will be responsible for part of its manufacturing.
Reuters has announced that bidding for the Hummer brand continues and at the current time three investor groups with no auto ties are in the running. http://www.reuters.com/article/bondsNews/idUSN0854525020090408
Don't be surprised by a last minute bid from a foreign auto manufacturer said an insider at GM.
The fate of hundreds if not thousands of workers are in the balance as well as the survival of the remaining 112 Hummer dealerships.
Officially, GM continues to work toward an out-of-court restructuring, which is something Ford (F) has been making great progress on. The catalyst for the apparent change of heart is the ongoing difficultly new chief executive Fritz Henderson and his counterparts at Chrysler are having negotiating with bondholders and the labor union.
No comments:
Post a Comment