The deal is done and Judge Robert E. Gerber of the U.S. Bankruptcy Court has approved General Motors’s plan to divide its assets between the good and the bad GM. According to the Judge, who included it in his decision, “this is the only way to prevent the patient dying on the operating table.” He also justified his quick decision by the expiration of the delay set by the Obama administration to grant the requested 60 billion dollar financial assistance.
The good GM, named NGMCO, now has permission to operate the most profitable parts of the company as well as the Chevrolet, GMC, Buick and Cadillac banners. Once the transactions are complete, NGMCO will change its name back to General Motors and continue to operate under its corporate and banner brands.
GM hopes to be able to maintain lower operating costs with this new company, particularly because of the considerable reduction of the dealership network that will be completed within a year, but also because the company managed to sign agreements with the workers’ unions to limit labour costs.
The new company will be owned by large institutions in blocs of shares. The American and Canadian governments (including the Ontarian government) will own 60.8% and 11.7% of shares, respectively. The Retiree Benefits Trust of GM’s employees will own 17.5% of the good GM, while the old company, the bad GM, will own 10% of its shares.
But if everything goes as planned, the American government has already announced its intention to put its shares on the public market. And if the return-to-profitability delays are met, the sale could take place as early as 2010.
The new company will also have an all-new board of directors, headed by Fritz Henderson, already in place. The board will be made up of six current members as well as new nominees chosen by the shareholders during the next few days. In fact, the Canadian board nominee should be announced Wednesday.
The sale of the good assets of the new General Motors company should be closed within four days, a stay imposed by the court. In concrete terms, the transition should appear seamless to the consumer, says GM.
The old company will be renamed Motors Liquidation Company and will be in charge, as its name suggests, of liquidating the non-profitable assets of the company. A new board will be elected to supervise the transaction during the next few weeks.
The only known current impact on consumers will be the reduction of the dealership network that will start at the end of the year. However, transition measures will be put in place so that all clients can recreate their relationships with the new dealerships.
The sale will not affect warranties or part availability, even for cars that will be taken off the market in the next months.
photo:General Motors
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The good GM, named NGMCO, now has permission to operate the most profitable parts of the company as well as the Chevrolet, GMC, Buick and Cadillac banners. Once the transactions are complete, NGMCO will change its name back to General Motors and continue to operate under its corporate and banner brands.
GM hopes to be able to maintain lower operating costs with this new company, particularly because of the considerable reduction of the dealership network that will be completed within a year, but also because the company managed to sign agreements with the workers’ unions to limit labour costs.
The new company will be owned by large institutions in blocs of shares. The American and Canadian governments (including the Ontarian government) will own 60.8% and 11.7% of shares, respectively. The Retiree Benefits Trust of GM’s employees will own 17.5% of the good GM, while the old company, the bad GM, will own 10% of its shares.
But if everything goes as planned, the American government has already announced its intention to put its shares on the public market. And if the return-to-profitability delays are met, the sale could take place as early as 2010.
The new company will also have an all-new board of directors, headed by Fritz Henderson, already in place. The board will be made up of six current members as well as new nominees chosen by the shareholders during the next few days. In fact, the Canadian board nominee should be announced Wednesday.
The sale of the good assets of the new General Motors company should be closed within four days, a stay imposed by the court. In concrete terms, the transition should appear seamless to the consumer, says GM.
The old company will be renamed Motors Liquidation Company and will be in charge, as its name suggests, of liquidating the non-profitable assets of the company. A new board will be elected to supervise the transaction during the next few weeks.
The only known current impact on consumers will be the reduction of the dealership network that will start at the end of the year. However, transition measures will be put in place so that all clients can recreate their relationships with the new dealerships.
The sale will not affect warranties or part availability, even for cars that will be taken off the market in the next months.
photo:General Motors