General Motors Corp (GM) said it would cut 21,000 US factory jobs by next year, phase out its storied Pontiac brand and ask the US government to take company stock in exchange for half GM’s government debt as part of a major restructuring effort needed to get more government aid.
The struggling automaker also said it would offer 225 shares of common stock for every US$1,000 in notes held by bondholders as part of a debt-for-equity swap.
The announcements came in a filing with the Securities and Exchange Commission (SEC) yesterday.
PHOTO: REUTERS
GM is living on US$15.4 billion in government loans and faces a June 1 deadline to restructure and get more government money. If the restructuring doesn’t satisfy the government, the company could go into bankruptcy protection.
GM said in a press release it would also ask the government to take 50 percent of its common stock in exchange for canceling half the government loans to the company as of June 1.
GM said the bond exchange would wipe away US$27 billion in unsecured debt if successful. The company estimates that after the exchange, bondholders would own 10 percent of the company.
In addition, GM is offering the United Auto Workers stock for at least 50 percent of the US$20 billion the company must pay into a union run trust that will take over retiree health care expenses starting next year.
All the stock offerings mean that current common stockholders would own only 1 percent of the company under the deals, the press release said.
GM owes US$28 billion to large and small bondholders, and under SEC rules, it must disclose its operational plans before making an exchange offer.
GM chief executive Fritz Henderson had said the company had to go further and faster in making its cost cuts to reduce the number of cars and trucks it needs to sell to break even.
The death of Pontiac, famous for the Trans Am sports car and the GTO, came after efforts in the last few years to market Pontiac as performance-oriented brand failed.
The company has said it wanted to keep Pontiac as a niche brand with one or two models, but is buckling under tremendous government pressure to consolidate its eight brands, several of which lose money.
Sources said GM wouldn’t have much new information on Hummer, Saturn or other brands, including Europe’s Opel. GM has said it wants to focus on four core brands, Chevrolet, Cadillac, GMC and Buick.
The government’s restructuring demands include swapping at least two-thirds of GM’s unsecured bond debt for equity in the company.
Such a move would help GM straighten out its debt-laden balance sheet.
One of two tropical depressions that formed off Taiwan yesterday morning could turn into a moderate typhoon by the weekend, the Central Weather Administration (CWA) said yesterday. Tropical Depression No. 21 formed at 8am about 1,850km off the southeast coast, CWA forecaster Lee Meng-hsuan (李孟軒) said. The weather system is expected to move northwest as it builds momentum, possibly intensifying this weekend into a typhoon, which would be called Mitag, Lee said. The radius of the storm is expected to reach almost 200km, she said. It is forecast to approach the southeast of Taiwan on Monday next week and pass through the Bashi Channel
WARNING: People in coastal areas need to beware of heavy swells and strong winds, and those in mountainous areas should brace for heavy rain, the CWA said The Central Weather Administration (CWA) yesterday issued sea and land warnings for Typhoon Ragasa, forecasting that it would continue to intensify and affect the nation the most today and tomorrow. People in Hualien and Taitung counties, and mountainous areas in Yilan and Pingtung counties, should brace for damage caused by extremely heavy rain brought by the typhoon’s outer rim, as it was upgraded to a super typhoon yesterday morning, the CWA said. As of 5:30pm yesterday, the storm’s center was about 630km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost tip, moving northwest at 21kph, and its maximum wind speed had reached
The Central Weather Administration (CWA) yesterday said that it expected to issue a sea warning for Typhoon Ragasa this morning and a land warning at night as it approached Taiwan. Ragasa intensified from a tropical storm into a typhoon at 8am yesterday, the CWA said, adding that at 2pm, it was about 1,110km east-southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost tip. The typhoon was moving northwest at 13kph, with sustained winds of up to 119kph and gusts reaching 155kph, the CWA Web site showed. Forecaster Liu Pei-teng (劉沛滕) said that Ragasa was projected to strengthen as it neared the Bashi Channel, with its 200km
PUBLIC ANNOUNCEMENTS: Hualien and Taitung counties declared today a typhoon day, while schools and offices in parts of Kaohsiung and Pingtung counties are also to close Typhoon Ragasa was forecast to hit its peak strength and come closest to Taiwan from yesterday afternoon through today, the Central Weather Administration (CWA) said. Taiwan proper could be out of the typhoon’s radius by midday and the sea warning might be lifted tonight, it added. CWA senior weather specialist Wu Wan-hua (伍婉華) said that Ragasa’s radius had reached the Hengchun Peninsula by 11am yesterday and was expected to hit Taitung County and Kaohsiung by yesterday evening. Ragasa was forecast to move to Taiwan’s southern offshore areas last night and to its southwestern offshore areas early today, she added. As of 8pm last night,
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