Sat, Apr 11, 2009 page10

• GM bankruptcy remains likely: ‘WSJ’

  SURVEY SAYS: A recent survey showed that more than three-quarters of Americans believe that the government should let the big automakers go bust

  • AFP
  • • 
    • 
    • 

  Troubled US automaker General Motors (GM) is set to renegotiate a less advantageous deal with bondholders to restructure its debt, but a bankruptcy declaration remains more likely, US media reported yesterday.

  “GM’s restructuring could play out in one of two ways. It could successfully negotiate cost-cutting concessions with unions and bondholders so it can become viable outside of bankruptcy. Or, in the more likely scenario, it will reorganize by filing for Chapter 11” bankruptcy, the Wall Street Journal reported, citing unnamed people familiar with the situation.

  The Treasury Department is pressuring GM to offer its bondholders “a small portion” of company shares, the Journal said, adding that the new deal marked “a sharp cut” from a bond-exchange offer by GM two weeks ago.

  

  A guest walks next to a Chevrolet Camaro Black during the Barrett-Jackson auto auction in West Palm Beach, Florida, on Thursday. The three-day event will include models from the GM Heritage Collection, such as the 1920 Chevy Model T truck.

  PHOTO: REUTERS

  The earlier deal had provided about US$8.5 billion in cash and new debt in GM, on top of 90 percent of company stock.

  The Treasury “believed the earlier plan was too generous to bondholders,” the Journal said, citing people familiar with the matter.

  GM has already received US$13.4 billion from the federal government to help shore up the company.

  The new offer could be presented “as soon as next week,” the newspaper said, warning that is “sure to face strong resistance from bondholders.”

  The plan would also split the company into a “New GM” that would have the company’s more promising brands, such as Chevrolet and Cadillac, and an “Old GM” with brands facing trouble.

  GM has until late June to give the government a restructuring plan, on which additional federal aid would hinge.

  Meanwhile, more than three-quarters of Americans think the government should let ailing automakers GM or Chrysler go bankrupt instead of bailing out the firms, a poll released on Thursday showed.

  Seventy-six percent of Americans think the federal government should let the auto companies go bankrupt, the survey conducted by CNN and the Opinion Research Corporation showed.

  The government has pumped billions of dollars into GM and Chrysler in recent months in a bid to keep the auto giants afloat. US President Barack Obama has warned, however, that the two firms could still face bankruptcy if they do not come up with viable plans to return to profitability.

  Since the auto crisis became headline news late last year, the poll found the number of Americans who think the US economy would face a major crisis if the auto firms go bankrupt has declined.

  In December 66 percent of those surveyed said they thought the companies were too big to let fail, compared to 47 percent now. A majority — 55 percent — said they thought they wouldn’t face any problems at all in their own lives if the automakers went bust.

  Only 37 percent of Americans said they would purchase a car from a bankrupt company, although the figure jumped to 57 percent if the government were to promise to stand behind the cars’ warranty.

  The survey, conducted between Thursday and Sunday, interviewed 1,023 Americans by telephone and has a margin of error of plus or minus 3 percentage points.
• Most Popular

  • 1

    LA Dodgers show off World Series rings

  • 2

    Homeless Sudan club defy odds in CAF Champions

  • 3

    Dodgers edge Tigers and Yankees beat Brewers in opening games in the US

  • 4

    Michkov key as Flyers beat Predators

  • 5

    US hands over first long-awaited F-16