Of the 27B in bonds, 6B was secured credit lines I believe.
You are a little confused on the debt. The BK was the US operations only (not even Canada and Mx) included. Therefore, 160B WAS NOT wiped out. 27B was converted to equity in the new GM. Here's a decent article on it.
http://www.marketwatch.com/story/gm-...-2009529132400
So, while they didn't come out rosy, they can recover a good bit. You have to also rememeber these bonds have been trading at very low values for quite some time, so the "losses" aren't exactly as they appear. Their options in a BK which did not have gov't funding, AKA liquidation, would have been to collect way less money. Nobody's paying top dollar for any auto assets or capacity. So, in your proposed "not strongarmed" scenerio, they would have ended up with much less now, and no prospect for recovery in equity. Most people who actually know what's going on realize that the bailout helped the bondholders pretty well, compared to a very risky liquidation.
Thread: Gm ipo
Results 41 to 47 of 47
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07-30-2009 09:02 PM
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07-30-2009 09:14 PM
Your terms are correct (Tier I, etc). GM only pays the Tier I directly, and then they pay the downward tiers who supply them. GM paid all of their contracts with tier I's, and actually directly to some key tier II's. Everyone got paid basically for direct (car parts). Sort of like you buy something at Wal-Mart as a finished good, and aren't responsible for paying Wal-mart's supply chain.
Also, as to the product planning you question, I'd disagree as well. Although GM/Ford had far too big of a reliance on trucks/SUV's, they are what people want/wanted (other than last summer) and are very profitable. We've also been transitioning to more fuel efficient crossovers before gas spiked, along with improving cars, working on Volt, hyrdrogen fuel cells.....the list goes on. Actually, the imports have been introducing more, larger vehicles and trucks (think huge Tundra investments) while we've been becoming the LEADERS in fuel efficiency (check it out if you don't believe, Malibu/Fusion and more). Remember it's a 4 year development, so this has been in the works since long before last summer.
As to why BK couldn't happen without gov't money? Simple, nobody else could provide that kind of debtor in possesion financing and it would have quickly become a liquidation where everyone loses (as I mentioned above). Further, without gov't backing of warranties, and the companies in general, nobody would have kept buying gauranteeing liquidation. That would have destroyed all value in the company basically so the investors get pennies on the dollar at best, and cost the gov't a fortune by deepening this recession with mounting job losses, etc.
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07-30-2009 09:59 PMI understand all that, but the root cause has not been dealt with.
Ford, GM, and Chrysler built SUV's and Pickups people wanted, and built them in the US mostly. They made money on them.
Ford, GM, and Chrysler built cars nobody wanted, they had to BECAUSE THE GOVERNMENT TOLD THEM THEY HAD TO, to meet gas standards and lost money on every one they sold.
Toyota, Honda, Kia, Huyandai, etc. Assembles some cars in the US mostly made of import parts, imports cars into the US mostly made of import parts, and sells cars at a profit because the government allows them to do that. Then, they bi tch at our companies wanting to send work out of the country so they WON'T GO BANKRUPT.....because they don't have to meet the high taxes, high anti-pollution costs, high safety standards etc.
Hasn't been changed, actually made worse, will need more money or go bankrupt again.Getting bad advice is unfortunate, taking bad advice is a Serious matter!!
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07-30-2009 10:36 PMThat is called golden handcuffs. I'd rather be in charge of an extra $10 to 15 hours myself, than trust a company to do a better job with it. On a 40 hour week, that's $400 to $600 dollars a WEEK. I imagine the worse money manager in the world could handle you retirement fund. Just does not sound plausible.
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07-31-2009 05:24 PM
Well said. I'm still a little more optimistic that we're profitable now though. Shedding 100 years worth of legacy costs helps level things off.
Now, we (Japanese, Europeans, etc) all may be screwed in 10 years if "Americans" accept Chinese cars as readily as they have all their other goods.
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08-01-2009 07:49 AM
Thanks for sharing RLJ.
Nobody buying?
Destroyed all value in the company?
Investors get pennies on the dollar?
Deepening this recession with mounting job losses, etc?
From my eyes all those things have and are happening right now. I don't know anyone that would buy a Chevy unless it was discounted enough they couldn't refuse. I don't mean a good deal- I mean a new F-350 diesel King Ranch type $50K sticker (I know that is a Ford but that is all I know- I don't buy Chevys..) for $30K out the door at 0% for 4 years type deal.
I know... It is a battle I fight every month or so when I get unsolicited offers for a job. It's a gamble but if I "win" and all that is promised is there when I retire the payoff is much greater staying put than leaving. I feel pretty good- lifetime medical, dental, pension plan, etc are all fully funded and held by the union; not the company. The company could go bankrupt tomorrow and those already retired would still be paid what was promised- my problem is I am not retired yet so I wouldn't get squat (well some thing but not like them). If the company were behind on payments or they kept promising this to new hire (unsubstainable business plan) I'd most likely get another job but for now I'm keeping the faith.
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08-01-2009 08:56 AMThe problem being it's all promised to you. Companies can, and do, change what they give, compared to what they promise. Even the federal government does that. My dad said he thought the government wouldn't take away the things they had promised him. This was several years ago, when peace dominated the world. Dad said what we needed was a good war so the military would give more stuff to the military. Don't think that a cable company is exempt from changing their minds.
If you ain't the lead dog, the view never changes.