DETROIT, Michigan (AFP) - - A new General Motors
emerged from bankruptcy Friday under a government-backed plan to
rescue the troubled US car giant and create a leaner firm to
compete in a difficult auto market.
The automaker transferred its main assets to a new
government-supported car company under a plan financed by the
administration of President Barack Obama and the Canadian
government.
The fast-track plan, similar to the one used to rescue Chrysler,
creates a new auto company that took over the main producing assets
of the automaker, while the old GM will remain under bankruptcy
court supervision.
"Today marks a new beginning for General Motors, one that will
allow every employee, including me, to get back to the business of
designing, building and selling great cars and trucks and serving
the needs of our customers," said Fritz Henderson, who remains GM
president and chief executive.
The "new GM" will be a leaner, smaller company after having shed
tens of thousands of workers, eliminated or sold storied brands,
shuttered scores of factories and rewritten its labor contracts to
slash costs.
GM will keep four key brands -- Chevrolet, Cadillac, Buick and
GMC -- and will have a total of just 34 US nameplates by 2010.
Several brands owned by the old GM, including Saturn, Hummer, Opel
and Pontiac, have been shed or are being sold.
The chairman of the new GM is Edward Whitacre, who headed
telecommunications giant AT&T.
"I intend to play an active role," Whitacre told reporters after
the announcement.
"I'll be more active than most chairmen," said Whitacre, who has
no experience in the automobile industry but spent 18 years at the
telecom giant.
"I need to make sure value is created ... We have to pay the
government back."
GM is also removing layers of management -- reducing the number
of US executives by 35 percent and overall US salaried employment
by 20 percent by the end of this year.
"GM is fortunate to get another shot, most likely its last one,"
said Michelle Krebs, an analyst with the research firm
Edmunds.com.
"Its biggest challenge remains the same one it has faced of
late; that is, convincing consumers -- now also GM's reluctant
shareholders -- that the company truly is changing and understands
what type of vehicles the marketplace demands."
Sean Maher at Moody's Economy.com said GM "still faces a
difficult year."
"The company does not expect to turn a profit in 2009 and is
unlikely to do so until US new vehicle sales rise substantially
above their current depressed pace below 10 million per year," he
added.
Once the world's largest corporation, General Motors sold more
vehicles than any other automaker from 1931 through 2007, after
which it lost the crown to Japan's Toyota.
The new GM emerges just weeks after a similar government-backed
effort to rescue number-three US automaker Chrysler under a plan
that gave Italian automaker Fiat a large stake and operational
control.
For GM, the new firm will be unencumbered by the bulk of the
massive debt load it racked up during years of bleeding balance
sheets.
GM entered bankruptcy protection on June 1 with liabilities of
172.8 billion dollars and emerged with 48.4 billion in debt.
The US government -- which has provided some 50 billion dollars
in financing -- received a 60.8 percent stake in the new firm
called General Motors Company.
Canada, which provided 9.1 billion dollars in loans, has an 11.7
percent stake and a United Auto Workers union retiree healthcare
trust fund holds 17.5 percent.
Canadian Industry Minister Tony Clement said officials are
"confident that the company will now be in a position to operate a
sustainable and viable business that will keep production,
innovation and jobs in Canada."
Creditors holding about 54 percent of GM bonds agreed to a plan
that would swap 27.1 billion dollars in debt for a 10 percent stake
and warrants allowing them to buy an additional 15 percent
stake.
Obama, whose auto taskforce spearheaded the GM restructuring
plan, has said his administration has no intention of nationalizing
the automaker over the long term and will not be participating in
its day-to-day operations.