As we mentioned in the Opening Bell, GM is staring default and potentially bankruptcy in the face (“we actually need about $30 billion”). A lot of light and noise has been emanating from GM’s general direction for several weeks now, but it looks like this is the main event. Of course, this isn’t a surprise. GM warned last month that Deloitte & Touche might excommunicate the company from its close circle of friends, and that, certainly, sounds like the beginning of the end.
GM has until the end of March to close deals with the UAW and debt holders to qualify for government assistance (again). One wonder’s if they are likely to make it that far.
GM said its creditors had agreed to waive a requirement that could have allowed them to force the automaker to repay more than $6 billion in loans because of the warning in order to allow GM to press its case for government aid.
In fact, GM has been begging for, and mostly getting, lots of waivers for call and acceleration provisions- at least until the Treasury fails to give the automaker the Goodhousekeeping Seal of Bailout Approval. And why not? The bond holders are really buying an option by laying off of GM here. That government cheese might be the lion’s share of what they see. It would be interesting to know what power creditors waived with respect to forcing liquidation owing to the government involvement.
Separately, GM said in its SEC filing that its lenders had waived “call” provisions that could have forced early payment of its $4.5 billion secured revolving credit facility, a $1.5 billion term loan and a $125-million inventory financing facility.
The new waivers allow GM’s lenders to call those loans if the U.S. Treasury rejects GM’s restructuring plan and request for additional aid and forces it to repay the $13.4 billion it has already borrowed from the U.S. government.
Gotta love priorities.
GM warns it may be forced into bankruptcy [Reuters]
A bankrupt GM is a given.
What happens next?
just fucking end it already, please.
GM stating that America made them build shitty cars and sign stupid deals with unions?
Yugo…….now that was an automobile.
Th Obama administration is going to have to really get the PR unit out in front of this one…first 100 days are going to be marked by this ‘event’
@4 No one, and I mean no one messes with Joe.
~the Muleskinner~
Let them file, bust the unions, shed the healthcare/retirement benefits and please, please, please FIRE the Morons who run the place (cut 3 levels deep minimum!) and then bring it out a lean mean fighting machine!!!!
4 Yeah – they were in office only 100 days and caused GM to enter bankruptcy.
What’s the significant of the ^’s in the headline? Now be nice…
if GM goes bankrupt, its pension obligations become the responsibility of the US government.
I dont think too many people realize this.
#6 – so you’re going to get rid of the workers and the management, which leaves… what exactly? The factories? I suppose you could try selling them, though it’s not like the Japanese or Europeans automakers are in any kind of shape to buy them right now. Just about all of them are asking their respective governments for bailouts.
9 True, but the govt also gets to take over their pension assets. At last reporting date, the GM plans were well funded (the union insists on these things). And in fact, a lot of the assets were moved into bonds (in order to better match pension plan liabilities, which are interest rate sensitive), which has cushioned them significantly from recent equity losses. So this is an issue, but not as dire as you make it seem.
@3, the Yugo had nothing on the Trabi’s impressive 0 to 62 mph in 21 seconds.
Turn signals were manual though (manual as in, stick your hand out the window)
Ford has warned that it will go bankrupt of GM files.
Toyota has warned that GM and Chrysler failures would take down the auto supplier industry in the US, and hurt its own ability to keep its US factories running.
including the suppliers and dealers, 1.6 million americans rely on the american car makers for employment.
#8 – Since the ^ is usually a way to represent exponents when you’re typing a math problem, such that 3^5 is “3 to the power 5″ or “3 to the 5″ for short, I would interpret the headline as “G to the M is B to the K?”
I suspect this is EP trying to be ‘hip’ but in a geeky kind of way.
The fall of mighty GM emphatically punctuates the end of the full pension/healthcare benefit model for US workers in globally competitive industries.
Pension liabilities may be well funded but most companies don’t have funds set aside for health costs. They are booked as incurred. And ever growing at around 10-15% per annum.
Car industry failure does not pose systemic risk. GM DOES need to go down like the Hindenburg.
Despite whatever short-term pain may arise, it is necessary to do. Of course it is an uncomfortable signal of the rapid decline of America’s middle-class.
However, sticking your head in the sand is not constructive in any way.
“As GM Goes, So Goes The Nation”