2nd UPDATE: GM Not Seen Being Publicly Traded For A Period-Obama Aide
28 Mai 2009 - 8:58PM
Dow Jones News
General Motors Corp. (GM) would almost certainly cease to exist
as a publicly traded company for a period once it emerges from an
expected bankruptcy, an Obama administration official said
Thursday.
The company would probably spend about six to 18 months being
privately held, with the largest stakes going to the U.S. and
Canadian governments and the United Auto Workers. The company would
then likely go public again, said the official, who spoke to
reporters on the condition of anonymity because of the sensitivity
of the discussions.
The official also said that a GM bankruptcy, expected to begin
as early as Monday, would likely last at least 60 to 90 days.
He cast doubt on the ability of the U.S. government to recoup
its entire investment in GM, saying that initial loans extended by
the Bush administration were wasted.
"The money in the first quarter this year unfortunately didn't
accomplish anything," the official said, adding, "We never
envisioned there being a significant recovery."
The expected loss on some of the loans conflicts with the
initial claims of Bush administration officials and GM executives,
who contended the loans would be paid back.
The Obama aide said the money was wasted because it wasn't
immediately accompanied by the significant restructuring of the
auto maker that is currently taking place.
"We hope to recover as many taxpayer dollars as we can," the
Obama aide said.
Under the U.S. Treasury Department's bankruptcy plan for the
Detroit auto maker, a "new" GM financed by the U.S. government
would buy up the relatively healthy assets from an "old" GM.
"It is likely that there will be a period of time in which the
new GM would not be a public company unless it chose to do an
initial public offering" of its stock, the official said.
The new GM would likely be "viable" in the current depressed
car-sales market and become "highly profitable" if sales picked up,
the official said.
"GM should be highly, highly profitable given the new cost
structure that is being put in place, given the vast reduction of
liability that has been achieved," the official.
The Obama administration won't make any final decisions on
whether to force GM into bankruptcy until after 5 p.m. ET Saturday,
the deadline for the company's unsecured bondholders to accept a
new debt-for-equity exchange, he said. That offering was estimated
to have the support of holders of more than a third of the
company's unsecured debt, and those bondholders were aggressively
pushing other GM lenders Thursday to accept the deal, the Obama
aide said.
The official didn't say how many lenders the administration
hoped to agree to the deal.
The administration official didn't dispute figures, disclosed in
a new regulatory filing, that the U.S. government's assistance to
GM could grow to $50 billion during the bankruptcy, with much being
used for so-called debtor-in-possession financing to keep the
company afloat while in court. GM has received just over $19
billion in government loans this year.
GM shares were recently down 1 cent, or 1.7%, at $1.13.
-By Josh Mitchell, Dow Jones Newswires; 202-862-6637;
joshua.mitchell@dowjones.com