GM emerges from bankruptcy

It was far quicker than I thought but it looks like GM is exiting bankruptcy and ready to operate as a new company. Bloomberg has some details:

General Motors Co., a new company majority-owned by the U.S. government, emerged from the remains of bankrupt General Motors Corp. by taking over the best assets of the biggest U.S. automaker.

GM now consists of four U.S. brands, has about $11 billion in U.S. debt, and will be run by a smaller corps of executives, the Detroit-based company said today. It finished restructuring in 39 days, three days faster than Chrysler Group LLC.

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Salaried employment will fall by 20 percent, GM said, and the number of U.S. executives will drop by 35 percent to help meet Chief Executive Officer Fritz Henderson’s goal of shedding management layers to speed decision making.

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The dealer ranks will shrink to 3,600 as the new company operates only its Chevrolet, Cadillac, Buick and GMC brands in the U.S. GM is dropping Pontiac, selling Hummer and Saturn and is working to dispose of Sweden’s Saab.

General Motors Co., not the old GM, will keep the proceeds from the Saturn and Hummer sales, Henderson said at the news conference.

The old GM will wind up with 16 abandoned plants, including contaminated factory sites, and a 9-hole golf course in New Jersey. Those will be disposed of by the bankruptcy estate, which is to be run by Albert Koch, and funded with $1.175 billion from the U.S. Treasury.

U.S. taxpayers own 60.8 percent of the new company. A trust for United Auto Workers’ retiree medical bills has 17.5 percent of the new GM; the Canadian and Ontario governments have 11.7 percent; and the old GM has 10 percent.

GM said its $11 billion in U.S. debt excludes $9 billion in preferred stock, and added that the figure “could change under fresh-start accounting.” Total obligations were cut by more than $40 billion, mostly in unsecured debt and liabilities for the UAW health-care fund, GM said.

Essentially, the new GM will have significantly less debt, operate only 4 brands, and have a somewhat smaller workforce and dealer network. The company is essentially owned by the government and it remains to be seen how it performs. One wonders how decisionmaking will evolve over time. GM is planning to pay back the government loans, which are separate from the shares owned by the government, and plans to list shares on the stock market by next year.

With the US auto market shrinking, we are already seeing signs that some minor players like Suzuki and Mitsubishi are contemplating pulling out. Now that the cost structure is more streamlined, GM should have some competitive advantages against all the others, except leading ones like Toyota. My feeling is that Ford, which did not declare bankruptcy, is going to have a really tough time.