[ad#ad-1]
So GM finally gave it’s anouncement after President Obama gave them an Ultimatum for making a deal with bondholders that they have come to an agreement.
President Obama wanted to force GM to go bankrupt as He (and his advisors) would see fit on Monday if General Motors management could not come up with an agreement on how to settle the bondholder issue and restructure. After a few failed attempts they finally came to a mutual agreement and it seems things can finally move on.
[ad#blog2_horizontal-2]
Yes, GM stills plans to file for bankruptcy but under a 363 filing which would allow for the assets of the current GM to simply be moved over to a new company, allowing for a brand new balance sheet and a new opportunity to reach the goals and targets envisioned for the current company.
[ad#blog2_horizontal-1]
The agreement came down to percentages over the new company ending up with the current bondholders taking 10% equity of the soon to be newly formed company. More so if they do not oppose the reorganization plan offered up by the government they also take in an option of purchasing up to 15% more of the new GM.
The US Treasury seems to like what it’s hearing as it has proposed to help with about $40 Billion Dollars which will be converted into common equity for the new GM giving it a very healthy balance sheet and increasing the total equity of the new company.
[ad#adsense_flatline]
The most important part of this whole deal should be how it will affect the employees and the overall economy in the United States. GM being part of the great American passion for not only automobiles but big companies that make good products but also produce a great many jobs with far reaching economic waves to suppliers, sellers and even your local car washes with their high school kid version.
Hollywood is another of the places were the GM money falls, for example the upcoming Transformers 2 Movie features a GM only “Car Cast”. Here is a video where General Motors shows off their stuff:
Comments