mcgraw_wv

End of an Era GM Going Bankrupt on Monday: Tech Ticker, Yahoo! Finance

GM declares Bankruptcy, shareholders get NOTHING...

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This feels like a tremendous buy opportunity when the shares begin to trade again for the "Good GM" they will be in a super strong competitive postiion compared to other car companies...

scout

Yea, that will be interesting. Wonder at what price it will start at? Maybe a couple of our financial gurus here will post their opinions.
I've been gambling on these stocks in the past year. Bought Ford when the vast opinion was it was going down, and made some nice change. A few times I've been tempted to buy a few thousand shares of GM, due to the price and reward if it didn't go belly-up.
Anyone want to guess what the new GM opens at?

PatsFanInVa

I'm not a "financial guru" but I don't think "Newco" opens at anything for a while (i.e., would it immediately be publicly traded? My guess is not.) Obviously, though, the hope is to replace government (taxpayer) equity stakes with private investment. The IPO would be at the discretion of the task force, I think, which means they're responsible to get back some return for the taxpayer, rather than unload the government stake as a penny stock.

Real World

If I read correctly, I saw something about the UAW owning 40% of the stock in the company. If that's accurate, then imagine who makes out in the end. It won't be the taxpayer who's forking over free billions, that's for sure.

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"The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him."
Leo Tolstoy, 1897

PatriotsReign

Personally, I look forward to the day when our government NEVER bails any private corporation out. In hindsight, I think it's obvious we never should have tried to bail any of the Big-3 auto makers...what a waste that was.

I'd like to see regulation that would prevent any corp. from ever getting "too big to fail". Specifically, any financial corp.

tanked_as_usual

only if they can get the UAW monkey off their backs.........

NEPatriot

Why did we pay 25+ billion dollars to see this ending?

scout

I don't see it as that much money if you look at the big picture. First and foremost, had we not bailed out the big 3 at that point in time, we may have had depression like circumstances in a lot of the country. Ford, which is in decent shape, and did not take TARP money, most likely would have gone belly-up.
Twenty Billion is less then we spend in Iraq for two weeks. It is also a drop in the bucket when you compare what GM received and what went to the banks. Not to mention comparing how the two industries used the money, one had guidelines, time tables, firings, negotiations, agreements, etc, while the other pissed on us.
I do not want our government managing any industry (including the Post Office), but didn't want to see another depression either, which may have resulted without that bailout. The recent agreements with bondholders and the UAW would not have happened a few months ago. They had to be hung out to dry for awhile.

IcyPatriot

GM was playing short 1 player when Toyota became the rage in the 70's. They never quite caught up and they only have themselves to blame. How many years has it taken for them to make a decent small car? How many more will it take?

PatsFanInVa

I believe UAW (through their health benefits fund) will own 17.5%.

GM union swallows cost-cutting concessions - May. 29, 2009

Basically GM owes a lot more to the health fund, and UAW accepted less than the value owed in a debt for equity swap, the 17.5% being the equity. You and I will own 70-odd%. Bondholders will own 10% if they accept that as the swap for their bonds (debt instruments issued by GM to raise money.) Stockholders will get nothing or next to nothing. That part's not too big a scandal, as common stock isn't secured debt. So it's secured debtors (bondholders) played off against the UAW health fund (and about a zillion other variables.)

We don't know how long this lasts; the idea, again, is that you come up with a "good GM" that emerges within 2 or 3 months, possibly even faster. That company takes few debt obligations with it. Then you sell off the "bad GM" a brand at a time, plus other assets that go with, to try to address the remaining debt. That can drag on forever, but it gets the good brands back in business faster. Some of the "bad brands" will probably survive, notably Saturn (I think.)

You save GM/Chrysler, and save those couple of hundred thousand jobs, and that is good. But you also save the million or two jobs in the supply chain leading to your finished vehicles.

Side story, on Chrysler not GM:

I left the lights on in my wife's PT cruiser, and went to jump it. Wow. You can't get to the battery. It is nowhere in sight. You can find a positive terminal with a red cap on it, however. So you can jump the battery, you just can not replace the battery. It looks like you need to either have a hydraulic lift or remove the engine to get to it.

I can't imagine that happens by accident. Looks like someone figured that a certain number of people will take the derelict Chrysler to the dealership, and pay to have all that happen. Mind-boggling.

PFnV