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Argos Media

Restructuring deal is last chance saloon for General Motors | Business | guardian.co.uk - 0 views

www.guardian.co.uk/...general-motors

US Economy GM Chrysler Fiat

shared by Argos Media on 28 Apr 09 - Cached
  • The ailing carmaker General Motors has proposed handing a controlling stake of more than 50% to the US government as it struggles to reach a deal with its lenders to avert imminent bankruptcy.The nationalisation, in effect, of the biggest US motor manufacturer would be part of a huge debt-for-equity swap as GM tries to shed $44bn (£30bn) of $62bn in crippling liabilities owed to the government, trade unions and bondholders.
  • But the plan was condemned last night as "neither reasonable nor adequate", by bondholders who would get only 10% of the company, forcing them to write off billions of dollars. Existing shareholders would be left with only 1%.
  • With its future on a knife-edge, GM delivered a blunt warning that unless its creditors accepted the plan, it would declare bankruptcy and leave the courts to carve up the company. Fritz Henderson, the chief executive, told a press conference at the company's headquarters: "If this cannot be accomplished out of court, we'll go into court and restructure GM under bankruptcy if it's necessary."
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  • As it struggles to stay afloat, GM has deepened cuts that will include 23,000 job losses by 2011, the closure of 16 of its 47 factories in the US and a 42% drop in the number of dealers selling its vehicles.
  • GM announced it was shutting its 83-year-old Pontiac marque as it slims its portfolio of brands to focus on just four names in the US: Chevrolet, Cadillac, Buick and GMC. The gas-guzzling Hummer and Sweden's Saab will either be sold or closed by next year but GM made it clear that Britain's Vauxhall brand was not under threat.
  • Under the company's plan, the US treasury and the United Auto Workers' union would get 89% of the company between them. In return, the government would write off half of the emergency lending extended to GM by US taxpayers.The union's shares would replace the billions of dollars due to be pumped into a trust fund to cover employees' healthcare.
  • GM has offered a 10% stake to bondholders, who are owed $27bn – a tough proposition to swallow. For each $1,000 of loan notes, bondholders would get 225 shares, worth little more than $550 at today's market price.
  • The Obama administration insisted that private-sector creditors should get no more than this slim return, demanding that unions and taxpayers receive the lion's share of the company. But in order to proceed, the proposal must be accepted by an overwhelming majority of 90% of bondholders by a deadline of 1 June.
  • An ad hoc committee representing bondholders last night vigorously objected to the carve-up: "We believe the offer to be a blatant disregard of fairness for the bondholders who have funded this company and amounts to using taxpayer money to show political favouritism of one creditor over another."
  • Rebecca Lindland, an analyst at IHS Global Insight, said many bondholders were likely to believe they could get a better deal under a bankruptcy arrangement: "The Obama administration may be more pro-union than a bankruptcy judge but it's really a roll of the dice."
  • GM's smaller rival, Chrysler, has a deadline of Thursday to strike a rescue deal with Italy's Fiat without which the US government has said it will withdraw financial support. Daimler assisted the process last night by in effect writing off its 19.9% stake in Chrysler and $1.9bn in loans.
  • For GM, the challenge is to shrink to a scale where it can break even with sales of 10m cars in the US annually, rather than the previous rate of 15m to 17m.
Argos Media

SPIEGEL Interview with Pakistani President Asif Ali Zardari: 'Nuclear Weapons Are Not K... - 0 views

www.spiegel.de/...0,1518,623134,00.html

Pakistan Asif Ali Zardari

shared by Argos Media on 06 May 09 - Cached
  • SPIEGEL: The Taliban is increasingly calling on the poor to follow them and to chase away the landlords and feudal lords. Are the Islamists in the process of transforming themselves into a social movement that pits Pakistan's underprivileged against the rich elite, who have opposed land reform? Zardari: I don't see that. In regions of the northwest border provinces, there is no feudalism because there is no land available that would be sufficient for agriculture -- it is all mountainous terrain. There are old families and there is a tribal chief system that relies on tribal laws that has been indigenous for centuries. The Taliban have superiority of numbers and arms and are more aggressive, so they sometimes overpower the local authority.
  • It would be a great gesture if Osama bin Laden were to come out into the open in order to give us a chance of catching him. The question right now is whether he is alive or dead. The Americans have told me they don't know. They are much better informed and they have been looking for him for a much longer time. They have got more equipment, more intelligence, more satellite eavesdropping equipment and more resources on the ground in Afghanistan, and they say they have no trace of him. Our own intelligence is of the same opinion. Presumably, he does not exist anymore, but that has not been confirmed.
  • SPIEGEL: Why do you leave the elimination of top terrorists in the Pakistani tribal areas to the Americans, whose drone attacks are extremely unpopular amongst the populace? Why don't you handle this yourselves? Zardari: If we had the drone technology, then we would. It would be a plus. We have always said that we don't appreciate the way the Americans are handling it. We think it is counterproductive. But it is mostly happening in the border areas between Pakistan and Afghanistan -- for all intents and purposes no man's land.
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  • SPIEGEL: What are you hoping will happen during your visit with US President Barack Obama this week?
  • Zardari: That is a million dollar question. And I am hoping the answer will be billions of dollars, because that is the kind of money I need to fix Pakistan's economy. The idea is to request that the world appreciate the sensitivity of Pakistan and the challenges it faces and to treat us on par with General Motors, Chrysler and Citibank.
  • our wife, Benazir Bhutto, who was assassinated by terrorists, feared that your country's nuclear weapons could fall into the hands of Islamist extremists. Do you share this fear? Zardari: If democracy in this country fails, if the world doesn't help democracy -- then any eventuality is a possibility. But as long as democracy is there, there is no question of that situation arising. All your important installations and weaponry are always under extra security. Nuclear weapons are not Kalashnikovs -- the technology is complicated, so it is not as if one little Taliban could come down and press a button. There is no little button. I want to assure the world that the nuclear capability of Pakistan is in safe hands.
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