Pontiac 1906-2010

[MrCleveland]

By TOM KRISHER and KIMBERLY S. JOHNSON, AP Auto Writers Tom Krisher And Kimberly S. Johnson, Ap Auto Writers – 29 mins ago

DETROIT – General Motors Corp. could be majority owned by the federal government under a massive restructuring plan laid out Monday that will cut 21,000 U.S. factory jobs by next year and phase out the storied Pontiac brand.

The plan, which includes an offer to swap roughly $27 billion in bond debt for GM stock, would leave current shareholders holding just 1 percent of the century-old company, which is fighting for its life in the worst auto sales climate in 27 years.

GM is living on $15.4 billion in government loans and said Monday in a filing with the U.S. Securities and Exchange Commission that it envisions receiving an additional $11.6 billion. But if GM's restructuring plan can't satisfy the government by June 1, the struggling company could go into bankruptcy protection.

GM said that it will ask the government to take more than 50 percent of its common stock in exchange for canceling half the government loans to the company as of June 1. The swap would cancel about $10 billion in government debt.

In addition, GM is offering stock to the United Auto Workers for at least 50 percent of the $20 billion the company must pay into a union run trust that will take over retiree health care expenses starting next year.

If both are successful, the government and UAW health care trust would own 89 percent of GM stock, with the government holding more than a 50 percent stake, CEO Fritz Henderson said in a news conference at GM's Detroit headquarters.

President Barack Obama's administration said in a statement that the bond exchange filing is an important step in GM's restructuring but the administration has not made a final decision about taking stock for part of its loans.

"The interim plan that GM laid out in this filing reflects the work GM has done since March 30 to chart a new path to financial viability. We will continue to work with GM's management as it refines and finalizes this plan and with all of GM's stakeholders to help GM restructure consistent with the president's commitment to a strong, vibrant American auto industry," the statement said.

Henderson said that although the government would own a majority of GM's outstanding common shares, the Treasury "hasn't demonstrated interest in running the company," but would have someone on the board looking out for the taxpayers' interest. The task force has directed current board chairman Kent Kresa to replace several board members.

"The shareholders, the VEBA (health care trust) and the government would want to have a someone on the board of directors," he said.

Deals with the UAW and the Treasury have yet to be finalized, he said.

The struggling automaker said it will offer 225 shares of common stock for every $1,000 in notes held by bondholders as part of a debt-for-equity swap. Henderson said the objective is to reduce GM's $27 billion of outstanding public debt by about $24 billion. The company estimates that after the exchange, bondholders would own 10 percent of the company.

That would leave current common stockholders with only 1 percent, GM said. Still, GM shares rose 34 cents, or 21 percent, to $2.03 in midday trading.

The plans, if successful, would reduce GM's debt by $44 billion from the present figure of about $62.4 billion.

"We would be substantially less-leveraged as a company," Henderson said.

Kip Penniman Jr., an analyst with KDP Investment Advisors Inc., predicted the exchange offer would fail and GM will file for bankruptcy. The value of all of GM's outstanding stock is about $1.27 billion, so if bondholders get about 10 percent of the equity, the offer is only worth about 5 cents per dollar of GM bonds, he said.

GM's plan depends on 90 percent of bondholders exchanging their debt, and "there is no chance that GM will get anywhere near that participation rate," Penniman said in a research note.

Henderson said if the debt exchange isn't successful, he would expect GM to file for bankruptcy protection somewhere around June 1, but such a filing would be unlikely very long before the deadline. Bondholders have until May 26 to accept the exchange offer.

Henderson said the company still prefers to restructure outside of court, but he acknowledged that the prospect of bankruptcy is more likely now that it was a few weeks ago.

"The task at hand in terms of what we need to get done is formidable," Henderson said. "But it can be done."

GM said it would speed up six additional factory closings that were announced in February, although it did not identify the locations. Additional salaried jobs cuts also are coming, beyond the 3,400 in the U.S. completed last week.

Henderson said there would be three more factory closures in 2010 beyond the six that were previously planned. He expects to identify them by publicly in May. They will include assembly, engine and transmission and parts-stamping factories, he said.

Including previously announced plant closures, the restructuring will leave GM with 34 factories at the end of next year, 13 fewer than the 47 it had at the end of 2008.

Besides the U.S. job cuts, General Motors Canada said it plans to slash its hourly work force to from 10,300 currently to 4,400 by 2014 years.

The company also said it plans to reduce its dealership ranks by 42 percent from 2008 to 2010, cutting them from 6,246 to 3,605. When asked how GM would accomplish that, Henderson would say only that the company would be making offers to the dealers in the coming weeks.

Mark LaNeve, vice president of North American sales and marketing, said a big chunk of the dealership reduction — about 450 — would come with the elimination or sale of Saturn, Hummer and Saab. GM would then look to end relationships with dealers that do only a small volume of business with GM, and then move on to other dealers, he said.

"We've got a cadence plan to it," he said. "I don't want to get rid of any dealers," LaNeve said, but acknowledged that that GM has had more dealers than it needs for quite some time.

Henderson said the new plan lowers GM's break-even point in North America to an annual U.S. sales volume of 10 million vehicles. That's slightly more than the current sales rate, but most economists expect an uptick in the second half of the year.

"This lower break-even point better positions GM to generate positive cash flow and earn an adequate return on capital over the course of a normal business cycle, a requirement set forth by the U.S. Treasury," GM said in a statement.

The company said it would phase out its storied Pontiac brand no later than next year, and the futures of Hummer, Saturn and Saab will be resolved by the end of this year by either selling them or phasing them out.

For Pontiac, the decision means the death of a brand known for its muscle cars including the Trans Am made famous in movies and the GTO, the subject of a nostalgic song by Ronny and the Daytonas.

Henderson said in a news conference that the company was spread too thin to make Pontiac work.

"We didn't think we had the resources to get this done from a product perspective," or marketing, he said.

He said the decision was very tough for many at GM because of the 83-year-old brand's heritage.

Henderson said talks continue with potential parties to buy a stake in Opel and are expected to continue through the end of May. He said the company would continue to have a presence in Europe as a stakeholder. He said Chevrolet is one of the fast-growing car segments in Eastern Europe and Russia.

One of the conditions to get aid from Germany is to have a private investor take a stake in Opel, he said.

___

AP Auto Writer Bree J. Fowler in New York, AP Business Writer Stephen Manning in Washington, D.C., and Associated Press Writer Charmaine Noronha in Toronto contributed to this report.

This Car Brand had to go sooner or later....Anyone else have an opinion on this?

[Fleet]

Sad. I am a fan of '50s-'70s Pontiacs. Especially the muscle car models like the '69 GTO Judge and '68 Ram Air IV 400 Firebird.

[TJL]

When I was a kid my Dad had a Pontiac Catalina.
Man, that thing was the size of an aircraft carrier.

[Marvo301]

When I was a kid my Dad had a Pontiac Acadian. Later when I was a teenager he bought a used Pontiac Parisienne. That thing was a boat!!!

[TripperFan]

Originally Posted by Marvo301

When I was a kid my Dad had a Pontiac Acadian. Later when I was a teenager he bought a used Pontiac Parisienne. That thing was a boat!!!

OMG! My mom bought a Parisienne in 1980. What a TANK! I wrote off my best friend's brother's car with that thing and only got a scratch on the chrome headlight frame! It was "baby poo brown" and constantly stalled when it rained.

I loved the Pontiac line until I had an issue with GM back in 2005 so in a sense, I'm having the last laugh now in my German made Jetta. LOL

But imo, the Pontiac line was way superior to the regular GM line. They could have eliminated that line and kept Pontiac and I would have been happy.

I have NO sympathy for GM - not after the way I was treated by them after me and my family being lifelong GM customers. I can easily see why the company's in trouble - and it's not just competition from other auto makers - it's because they got too big for their britches and treated their customers like dirt the past few years. Looks good on 'em now!

[Doodyville10019]

I drove a two-door Sunfire in the early '90s. One of the best cars I ever owned.

[dawsongirl]

Guess when my lease on my G6 is up in 2011, I won't be getting a new one. Way to go, screwups. Perha[s if you didn't have 20 different car models....how many compact cars/SUVs.etc. does one company need to make? No one wants to drive an Aveo!

Chrysler should be the one folding. They make the worst cars I've even be unlucky enough to drive. And Ford would have to be the last car company on Earth (same goes for Chrysler) for me to ever buy their garbage.

[TripperFan]

Originally Posted by Doodyville10019

I drove a two-door Sunfire in the early '90s. One of the best cars I ever owned.

Same here. When I totalled my Sunbird, they had been replaced with the Sunfire (Asuna started them and then Pontiac took over). Mine was a 1996 GT in black - fully loaded. I loved that car and had it for 11 years. I would have owned it longer too if GM hadn't been such *******s. My ex replaced his Aurora with a Sunfire (2002) and even though he's now looking at an Infiniti SUV, he plans on keeping the Sunfire for winter and "hack" driving.

I have to admit, I'll miss the line. They put out some really sharp looking cars in their time. It was my favourite line of all North American cars.

[theshark8777]

my dad works at the plant that made the sunbird and sunfire.

I just wonder why pontiac instead of buick?

[YoliUSA]

It's sad that GM is discontinuing the Pontiac line because a lot of people are going to lose their jobs and also because the cars in their lineup were pretty cool. My dad owned two Pontiac in his lifetime: a 77 Firebird (like the one in "Smokey and the Bandit"), which he always considered one of the best cars he ever owned. He also owned a 98 Grand Prix.


I totally agree with the previous poster who said that Chrysler should be the one closing. Their cars are really boring and the quality sucks (never owned one, but that what pretty much everyone says).

[Marvo301]

Originally Posted by YoliUSA

It's sad that GM is discontinuing the Pontiac line because a lot of people are going to lose their jobs and also because the cars in their lineup were pretty cool. My dad owned two Pontiac in his lifetime: a 77 Firebird (like the one in "Smokey and the Bandit"), which he always considered one of the best cars he ever owned. He also owned a 98 Grand Prix.


I totally agree with the previous poster who said that Chrysler should be the one closing. Their cars are really boring and the quality sucks (never owned one, but that what pretty much everyone says).

Remember the K car! Oy!!!

[dawsongirl]

Originally Posted by Marvo301

Remember the K car! Oy!!!

Those were sooooooo cool.


O_O

[dawsongirl]

Originally Posted by YoliUSA

I totally agree with the previous poster who said that Chrysler should be the one closing. Their cars are really boring and the quality sucks (never owned one, but that what pretty much everyone says).

We had a Neon once (we inherited it...lucky us). There was some engine part that kept breaking and a mechanic basically told my dad they were designed to break every 6 months or something. WHAT?! THERE'S QUALITY!

[Marvo301]

Who wouldn't want to drive one of these cool cars!

[dawsongirl]

Originally Posted by Marvo301

Attachment 147716

Who wouldn't want to drive one of these cool cars!

An old lady might like it?