In the latest GM clusterfuck drama, the Wall Street Journal flashes the pressing news that a group of unsecured GM noteholders has agreed to the latest 10% debt for equity swap amusement. Outstanding work guys and gals! How many votes have you got in the bag?
We have been informed by the advisors to the unofficial committee of unsecured GM Noteholders, Houlihan Lokey Howard & Zukin Capital, Inc. (financial advisors) and Paul, Weiss, Rifkind, Wharton & Garrison LLP (legal counsel), that the unofficial committee and other large Noteholders (who collectively hold approximately 20% in aggregate principal amount of the Notes) support the economic terms of the Proposal. (emphasis added)
Oh. Need we point out that this appears to suggest you have failed to obtain agreement from 80% of the unsecured debtholders? So, do the ad hoc and the official credit committee agree? Any news on secured debt holders. Anyone? Anyone? Bueller? Bueller?
Maybe we were a bit quick ordering the Presidential Suite for the weekend.
GM’s SEC Filing on the Treasury Offer [The Wall Street Journal]
It’s one thing to say that a firm might be better off in bankruptcy. It is another entirely to prod it down the plank towards the sea.
General Motors Corp.’s 60-day deadline to restructure is unlikely to be extended because the U.S. won’t repay $1 billion in convertible notes maturing June 1, according to a person with knowledge of the discussions.
President Barack Obama’s auto task force told the biggest U.S. automaker it doesn’t want taxpayer funds used to repay debt maturities, said the person, who declined to be identified because the talks are private. Detroit-based GM has $1 billion of 1.5 percent convertible securities coming due June 1. The debentures, issued in increments of $25, fell $2.05 to $7.20 as of 1:56 p.m. in New York, which would be the lowest closing price since December, according to data compiled by Bloomberg.
Funny, we don’t remember any sort of squeamishness about “taxpayer funds used to repay debt maturities,” before now. Why the sudden change in heart?
GM Said to Be Warned Government Won’t Make June 1 Debt Payment [Bloomberg]
“GM CEO says bankruptcy ‘could work’ but would be too risky,” is the exact ticker line.
“That, Mr. Wagoner, is the sound of inevitability.”
The situation is fluid.
So GM is going to grudgingly accept another check for $4 billion. Is anyone else so numbed to large numbers at this point that $4 billion really doesn’t seem like much money? I mean, John Paulson spits $4 billion. Tim “The Safecracker” Geithner exhales larger sums while taking his afternoon nap. (And you believed that story about closing the cash room for “painting” every afternoon).
Yes, oddly, those sorts of figures seem boring now. Even when the UAW and management have walked away from the table, we seem so attached to the Buick Lucerne that a few billion more seems trivial to throw down the tubes in order to save it from oblivion.
The U.S. government will release $4 billion in additional aid to General Motors Corp (GM.N) on Tuesday as planned, a White House aide said on Monday, ahead of the deadline for the automaker to submit a new survival plan.
I suppose we can just hope they did their homework right this time.
GM to get $4 billion aid tranche Tuesday [Reuters]
Just in case you weren’t sure, General Motors is in trouble. Big trouble. On top of all the other trouble you’ve no doubt heard about they are now planning to cut 10,000 jobs. Yesterday’s rumors are fact this morning as the flagging former giant begins to face the music.
General Motors Corp., the largest U.S. automaker, plans to eliminate 10,000 salaried jobs globally, people familiar with the situation said.
The situation is fluid (except for the cuts, which are solid as can be).
General Motors Is Said to Plan to Eliminate 10,000 Jobs [Bloomberg]
It says something that we credit Ford with some kind of great accomplishment insofar as they didn’t go begging for government handouts when GM and Chrysler debased themselves during Congressional Pledge Week. (“I want that bathroom floor shining in the light by morning. Here’s a toothbrush. If a sister asks, you must be able to produce $0.67 exactly at all times. And don’t let me catch you flying around in a jet. You are going to drive and you are going to like it.’) It says something else that, as it looks now, Ford might join her sisters in that ignominious sorority, which we understand is “Theta Theta Theta,” though its not clear if this has to do with the inexorable decay of members’ value with the passage of time. We hear the initiation involves nudity, a paddling by Bob Corker and the application to the left asscheek of a brand reading “Your Ass Is Mine” above the great seal of the United States.
If nothing else, last month’s dismal reports should have put the lie to this fantasy that somehow U.S. light vehicle sales will top 12 million this year (c.f. $38 crude this morning, however) the key number Ford was relying on in its smug refusal to admit the need for untold billions to keep everyone employed making the new Ford F150, and the idea that it could find reasonable off-campus housing rather than join the sisterhood.
What is it exactly that is going on with big auto, we ask you. Is it public posturing? Do these corporate leaders simply show a brave face during the day before retiring to the refuge of their curtain drawn bedrooms, head in hands, to sob in despair? (Maybe it was the shame of humiliation waking up missing key articles of clothing after that mixer/binge drinking session with ZBT/The Oversight Committee, though). Or are they really just completely deluded? Either way, should we permit them the privilege of handling any resources beyond their own checkbook anymore?
Chairman William Clay Ford Jr. told reporters yesterday that Ford’s “game plan is to keep going on our own” and not seek federal loans unless “the world implodes as we know it.”
Mr. Chairman, your false vacuum collapse has arrived and bubble nucleation proceeds apace.
Ford May Seek U.S. Help as Economy Imperils Sales [Bloomberg]
GM is merging with Chrysler. No, they have no intention of merging. Yes, they are merging. Any day now. No, not merging. Never. Ok, maybe we are talking about it. No, really, we aren’t. At all.
GM denies Chrysler merger talks revival report [Reuters]
…that should get it to trade at around $2.15.
General Motors Corp. plummeted as much as 31 percent after a Deutsche Bank AG analyst downgraded the shares and cut the price target to zero.
GM lost $1.03 to $3.33 at 11:05 a.m. in New York Stock Exchange composite trading, after falling as low as $3.02. Ford Motor Co. dropped 11 cents to $1.91. Detroit-based GM said Nov. 7 it may not have enough cash to operate this year.
GM Plummets After Analyst Cuts Price Target to Zero [Bloomberg]
Who can possibly make an argument that the “big three” are anything but the Terri Schiavo of the United States public markets? They have been on life support so long and at such cost as to defy reason, other than the sentimental hand wringing that looks fondly back three decades, or has some religious hangup preventing responsible parties from just pulling the damn plug already. Why not just overfund the pension plans with government money, send all of the workers home and close shop? In the end, it might be cheaper.
We suppose that it merely highlights the miasma that is the domestic automotive industry when the likes of Kirk Kerkorian get sucked into failed billion dollar experiments designed to revive the industry.
Friday will see General Motors open the kimono, likely followed by panicked shrieks of “Shrinkage! Shrinkage! There was shrinkage!” by management. A gentle pat on the back from Mom Pelosi (“There there, you have plenty of growing to do yet.”) along with a second handout for $25 billion (oh, wait, sorry, a $25 billion ‘bridge loan’) would go a long way to reassuring the balding firms for another few months. But the trouble won’t stop there.
Last week we were forced to endure the domestic air travel and car rental facilities at several major airports. To our total lack of surprise, SUVs were suddenly the bargain basement rental deal at the counter. A sure sign of inventory dumping. And when even the rental companies can’t stomach any more bloated family of twelve transporters? Punt.
Perhaps you will forgive us for snickering at articles that wonder aloud if the firms will even survive long enough to see the savior of all things economic take the oath of office. We don’t care who you are. That there’s funny. CNBC using 400 words to point out that GM needs cash? Not so much. Where were you when Kirk was dumping his hard earned cashed on the fire?
I think this is our favorite quote, courtsey of Senator Debbie Stabenow (D-MI):
“President-elect Obama understands you can’t have an economy that doesn’t make things.”
Auto Industry to Obama: Save Us Before Even Taking Office [U.S. News And World Report]
GM: Cash Is More Than “King” For Survival [CNBC]
Auto reports hint government help is critical to survival [The Detroit Free Press]
We have a soft-spot for Kirk Kerkorian. He flies. He owns casinos. He was married once for a month. He names his firms after his kids. He was alive during the Roosevelt administration. (The first one). So we looked the other way when he invested in General Motors. Well, until one of our friends pestered us with the fact until the denial finally melted away. But we explained that away with a wave of the hand a quick “Well, he obviously knows something about their pensions that the rest of us don’t. After all, we don’t have access to the books, you know,” and a good, stiff martini.
Then there was the Ford thing. We know, we know. We called in sick from home for two days straight. And now? What are we supposed to do? He’s lost like ten billion dollars for fuck’s sake. On automotives. I mean, what the hell? It’s a culture shock scene out of Austin Powers or something. Like no one told him Prince Charles was divorced. Or that automotive stocks are three deep breaths away from cardiac arrest.
Look, people. My friend Linda’s parents had her grandfather, who was quite wealthy himself considering their respective backgrounds, committed because he was spending $10,000 a month on lottery tickets. That was to “preserve the estate from irreparable harm.” He wasn’t even 70, that guy. And he wasn’t nuts. At least, I didn’t think so. He just liked playing the lottery. He liked those scratch tickets, had his favorite game that he preferred, studied the odds. He even won quite a bit of his money it back. No one ever heard from him again. Ever. There was the hearing. And then he was gone. Poof.
He’s probably somewhere in a “facility” with a two-word name that is supposed to say “calm safe place to drop off grandpa to
die rest,” but actually hints strongly at the immediate presence of the grim reaper. You know what I mean. “Shady Grove” or “Whispering Cove,” or something.
Maybe he’s sitting in an old wheelchair that doesn’t even roll anymore (where the hell is he going to go anyhow?) with a cheap, brown blanket draped over his legs. What’s with that blanket anyhow? The “lap blanket.” It is always so obviously cheap. Some leftover from its third estate sale. And the “facility staff” puts it on him rain or shine. I mean, if you are trying to keep the guy alive, I’m not sure why he gets the lap blanket in August. Or maybe I have the equation backwards there.
So Linda’s parents disappear grandpa into the miasma that is the “elder care” industry (with lots of overlapping ownership and redundancy elimination owing to consolidation with the “death” industry) like he’s Junior Soprano for spending $25,000 over several months. Then they take possession of his high-seven-figure estate and drop most of it into what can only be called a real-estate “compound” at the height of the bubble. Now its worth a bit more than zero.
See, I’m thinking Linda’s parents and Kerkorian, much as I love him, should be sitting in a broken wheelchair at “Shady Grove,” with a blanket draped over them in the middle of summer.
Ok, I take it back. I’m just mad because K2 never calls me anymore.
Kerkorian Cuts Ford Stake, May Exit as $1 Billion Bet Collapses [Bloomberg]