General Motors is hoping to emerge from bankruptcy conduct an initial public offering sometime in 2010, according (subscription required) to The Wall Street Journal. The IPO could either raise additional capital for the company or allow the United States and Canadian governments to begin divesting their stakes in the company.
Washington has been mum on how and when it plans to begin recouping its "investment" in General Motors. Earlier this week on DailyFinance, Peter Cohan wrote that our investment in GM has mostly gone down the tubes:
gm posts
The hot new IPO of 2010: General Motors
Hummer: Deal or no deal?
Forging a cross-border buyout deal is always difficult. But, it is even more complicated if the seller needs to get the deal done fairly quickly.
No doubt, this is the case with GM, which is in the process of unloading its Hummer unit. The interested buyer is Sichuan Tengzhong, which is based in China. The price tag on the deal: $500 million.
However, this week we got a bombshell; that is, the BBC reported that the Chinese government wanted to kill the deal.
Lee Iacocca suggests Chrysler return the government loan soon
Former Chrysler CEO Lee Iacocca has decided to weigh in on the current situation at his former employer, when interviewed by the Associated Press. Iacocca believes that the automaker needs to get the government out of the business as soon as possible, noting that government intervention is "strong motivation to repay the loan early." Iacocca added that the government "oversight is just too extreme." He reminded readers how Chrysler repaid the previous ten year loan from the government in three.
Chrysler and General Motors (OTC: GMGMQ) are have both received billions of dollars in government loans. Chrysler has recently exited bankruptcy protection, while GM remains in Chapter 11. The Treasury Department's auto task force has already made its presence felt, forcing out both CEOs and is reshaping their boards.
Chrysler and General Motors (OTC: GMGMQ) are have both received billions of dollars in government loans. Chrysler has recently exited bankruptcy protection, while GM remains in Chapter 11. The Treasury Department's auto task force has already made its presence felt, forcing out both CEOs and is reshaping their boards.
Continue reading Lee Iacocca suggests Chrysler return the government loan soon
UAW adds its voice to new General Motors board of directors
The United Auto Workers union will own a 17.5% stake in the new General Motors company through its Voluntary Employee Benefits Trust (VEBR).As part of that ownership stake, the UAW's interests will be represented on the board of directors by former Wall Street Analyst Stephen Girsky.
BusinessWeek reports that "While Girsky has served as an advisor to the union for several years, and clearly has a soft spot for labor, he's all too aware of GM's problems. He was a tough critic of the company when he covered its stock for Morgan Stanley. Girsky also worked at the company as an advisor to former CEO Rick Wagoner, too. Don't look for him to press CEO Fritz Henderson to give the UAW a contract that would erase some of the concessions that were made prior to bankruptcy."
Continue reading UAW adds its voice to new General Motors board of directors
My portfolio won't be test-driving CarMax
CarMax (NYSE: KMX), an expert in used automobiles and a colleague of AutoNation (NYSE: AN), is up today nearly 14% in early-afternoon trading on spectacular volume. What's driving (pun intended!) the buying action? You guessed it...earnings. Revenues for the first quarter decreased 17%. Adjusting for items, CarMax earned $0.22 per share, and, according to my colleague Melly Alazraki, that figure simply annihilated earnings projections developed by the analysts.
Well, well, well...what to do now, right? CarMax is an interesting company in an interesting time. It sells used cars during a period when new cars aren't selling too well. We all know about the problems at Ford (NYSE: F) and General Motors (OTC: GMGMQ). But that isn't reason enough to put money down on this stock. Especially not after a rally like we're seeing today.
Obama says 'reasonable probability' of getting paid back on auto loans
The average American family of four has, against its will, invested over $900 in the Detroit auto industry so it's fair to ask: Will we be getting our money back?President Obama's auto task force told lawmakers yesterday that there is a "reasonable probability" that the federal government will be paid back. I don't buy that and here's why: Liquidation analysis of GM suggests that there would be just $10 billion in net proceeds from a liquidation. Given that the government has $80 billion invested in the industry with little collateral, long-time money losers like GM and Chrysler will need to earn spectacular returns on equity to pay back their loans. I just don't see it happening. Do you?
Continue reading Obama says 'reasonable probability' of getting paid back on auto loans
General Motors yanks the hybrid Malibu, warns common shareholders
Downtrodden General Motors (OTC: GMGMQ) is throwing in the towel on its 2010 hybrid-electric Chevy Malibu, according to a report in The Wall Street Journal (subscription required). Due to weak demand among retail customers, dealers have stopped ordering the car, and the automaker is currently choking on a backlog of the unpopular hybrids.
To drive home the point, the Journal quotes Joe Menegos, the sales manager at a National City, Calif., dealership, as saying, "We could care less" that the hybrid Malibu is being deep-sixed.
Continue reading General Motors yanks the hybrid Malibu, warns common shareholders
Former AT&T CEO Ed Whitacre to lead the new GM
Out with the old, in with the...old. Former AT&T, Inc. (NYSE: T) CEO Ed Whitacre, Jr. has been selected by the U.S. Government (how quaint) to lead the "new" GM once it rises from the ashes. Whitacre, who basically rebuilt AT&T into the telecom behemoth that was dismantled by the U.S. Government in 1984, will be in charge of re-surfacing GM's future road to glory.Continue reading Former AT&T CEO Ed Whitacre to lead the new GM
House: Save the auto dealers! Can Ford survive the intervention?
Well, you knew it had to happen since Uncle Sam effectively owns Chrysler and General Motors. The U.S. House of Representatives is trying to pass a bill that would mandate the large automakers honor existing franchise agreements and put off dealer closures. The Dow Jones Newswire article quoted Bailey Wood, a lobbyist for the National Automobile Dealers Association, with the following doozy: "Closing dealerships will not make either Chrysler or GM any more viable, and Congress is realizing that," Wood said.That the politicians are getting involved in operational decisions is clear evidence of the impending doom for the large auto companies. It's hard enough to exit bankruptcy and restart a business. It's far harder to do so while carrying political agendas on your back.
Continue reading House: Save the auto dealers! Can Ford survive the intervention?
Lobbying pays off big for car dealers
Last week I wrote that the congressional hearings on General Motors' plan to terminate dealerships represented the manifestation of the worst fears surrounding a government-controlled auto industry: managerial meddling motivated by political rather than economic aims.
Today Bloomberg reports that there's a very good reason for Congress's willingness to listen to the car dealers: "Automobile dealers have been among the biggest contributors to U.S. political campaigns over the past decade, surpassing all but two groups in donations. That $13 million investment may be paying off as the dealers get a lot of attention on Capitol Hill."
If GM liquidates, everyone loses
AlixPartners, one of the firms charged with helping General Motors navigate its way through bankruptcy, performed liquidation analysis as part of the company's court proceedings, and its findings are disturbing: If GM liquidated tomorrow, there would be less than $10 billion in net proceeds.
The New York Times reports that "bank lenders owed $5.4 billion would recover from 26.3 to 77.1 cents on the dollar. The United States Treasury, on the hook for $20.5 billion, fares even worse under this scenario, getting just 12.7 cents to 23.7 cents on the dollar for its claims. Unsecured creditors would get nothing." (emphasis added)
Saturn enters the Penske orbit
Back in the 1950s, Roger Penske not only raced cars, but he also sold them. And, when he retired in 1965, he focused on his business interests, creating an empire. Now, there is Penske Auto (NYSE: PAG), which operates a chain of auto dealers, a truck leasing operation, and a high-performance car operation.
Well, this week the empire got even bigger; that is, Penske agreed to purchase the Saturn unit from General Motors. Terms of the deal were not disclosed.
Comfort Zone Investing: Is Ford a buy?
Ford (NYSE: F) is the last of the "Big" Three standing on its own two feet. Chrysler and General Motors (OTC: GMGMQ) are on crutches supplied by the federal government. While they're both still upright, those crutches are mighty expensive (the government will own 60% of GM when it emerges from bankruptcy).
Speaking of bankruptcy, Chrysler is already on the other side and now a partner with Fiat. That was perhaps the fastest legal action ever seen. Usually bankruptcy takes between 18 months to two years before a new company emerges.
Plenty of GM news: Sale of Saturn, management shakeup, Delphi buyout
This morning, The Wall Street Journal (subscription required) reported that General Motors (OTC: GMGMQ) has reached a preliminary deal to sell its Saturn distribution network to Penske Automotive Group. Penske is the second-ranked U.S. dealership group.
The Journal says that Penske will take over the brands, trademarks, service and parts operations, as well as the distribution operations related to the Saturn brand. The report also notes that Penske will make deals with other auto makers (one possibility is Renault SA) to purchase vehicles that will fill out the Saturn portfolio.
The Journal says that Penske will take over the brands, trademarks, service and parts operations, as well as the distribution operations related to the Saturn brand. The report also notes that Penske will make deals with other auto makers (one possibility is Renault SA) to purchase vehicles that will fill out the Saturn portfolio.
Continue reading Plenty of GM news: Sale of Saturn, management shakeup, Delphi buyout
Will GM be worth more than Ford?
Will GM be worth more than Ford? The answer is yes. Based on yesterday's closing bond prices, since May 28 when the government gave an exchange offer of a 10% equity stake and another 15% in stock warrants, GM's $3 billion of 8.375% bonds maturing in 2033 jumped 72% to 12.25 cents on the dollar yesterday. GM's market value will be about $33.1 billion, compared with Ford's $19.9 billion.
Revenue for GM will probably come in at about $120-$140 billion. Last year the numbers were $146 billion for GM and $146 billion for Ford Motor Company (NYSE: F).
Cramer on BloggingStocks: Don't paint everything with the jobs brush
Seven banks go up in smoke ahead of the holiday weekend
Sears offering hedge for consumers who lose their job -- good idea?
