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REPORT: 'Old' Chrysler defaulting on loan obligations

Before there was a Motors Liquidation Co, post-bankruptcy GM's hived-off shelter for useless assets, there was Old Carco LLC. That's the company Chrysler built to house its useless assets, and unsurprisingly, it doesn't have good news for unsecured creditors. Old Carco was left with liabilities of $20.5 billion, but has less than half of that to pay off everyone it owes.

The latest accounting says there is $2.345 billion to pay things off. With a shortfall that drastic, even the U.S. Treasury and the Canadian governments are waiting for their money, with a $3.34 billion loan and $29 million in interest going not being repaid. The Treasury sent Old Carco a notice of default last month, which strikes us as a waste of a stamp and paper.

And since Old Carco isn't allowed to borrow any more money, there is almost no chance that creditors will be made whole. At this point, as the company tries to unload leftover factories and property, it looks like the best anyone's going to get is pennies on the dollar -- or just fractions of that -- and that could be for the folks first in line. Old Carco is dead, long live Chrysler...

posted : 9/13/2009 @1:12:46 AM

REPORT: GM tells dealers to think small to sell big

After decades of pushing heavy iron, General Motors executives are telling the company's dealers to think "beyond our dominance in trucks" and prepare to start selling small cars (vehicles like the forthcoming Chevrolet Cruze, above). The message was broadcast late last week at the Rock Financial Showplace in Michigan, as representatives from about 430 GM dealers gathered to hear the automaker's latest plans as they emerge from bankruptcy. Brent Dewar, the new vice president of Chevrolet Global, added that dealers, "have to think slightly different... about how to sell the value of the vehicle on content and that small doesn't mean less."

Other news to emerge from the event included the announcement that GM had appointed an executive tasked with retaining the three million GM customers who will lose their vehicle model, GM brand, or dealership to the restructuring, and that Buick is planning a new mid-size sedan for 2010 followed by a compact car in late 2011. GM also said that strong Pontiac sales this summer will allow the brand to exhaust its inventory by the end of the year, ahead of earlier projections.

posted : 9/1/2009 @5:55:38 PM
Rally 'round the family: Ford backs up Chrysler's "weak" assessment of new CAW contract

GM just ratified an agreement with the Canadian Auto Workers union, and as soon as it did, Chrysler blasted it for being "weak." Chrysler's complaint was that the CAW didn't offer enough concessions to bring production costs into line with market realities. Now Ford has piped up in Chrysler's corner, saying "We believe the recently negotiated agreement between General Motors Canada and the Canadian Auto Workers will not keep Ford's Canadian operations competitive in today's global economy." Ford's Canadian labor costs per hour are supposed to be $70 Canadian, about $55 in U.S. dollars. Even though that is the amount that Ford recently just got its American labor costs down to, the company says it will need more savings from up north. GM, which hailed the agreement as promising, hasn't commented on its competitors' assessments, and neither has the CAW.
posted : 6/1/2009 @12:46:54 PM
Ford's new deal with UAW gets wages down to $55/hour

Two years ago when Ford was negotiating a new contract with the UAW, the automaker was paying its union workers the oft-bandied amount of $70 per hour. That amount wasn't the actual hourly wage of each employee, though, but rather the employee's hourly wage plus the cost of contributions to current and future benefits for retirees and workers still with the company. Now, due to a newly signed agreement with the United Auto Workers union, Ford projects that total cost per worker will go down to $55 per hour. That puts The Blue Oval only about $5 away from the total hourly compensation paid by transplanted automakers like Toyota and Honda to their non-union workers. Among measures such as cutting overtime, bonuses, cost-of-living increases, and one paid holiday, Ford reworked its contribution to the VEBA account that will fund retiree healthcare so that it can pay into it with stock instead of cash, the total savings of which could add up to $500 million per year.
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posted : 5/31/2009 @7:13:31 AM
REPORT: GM bondholders could still spur Chrysler merger

It's the General Motors and Chrysler merger saga, take three. A few months ago, GM said "No can do" to the union, taking off its ring and walking out of church. Now GM's bondholders may be contemplating a shotgun wedding, forcing The General back to the altar over the debt-equity swap the automaker needs to conclude to have a chance at more government financing. GM needs to shed $18 billion in unsecured public debt, but the bondholders have so far been complaining about the equity they're being offered. According to an outside analyst, if bondholders think a merged GM-Chrysler will save the combined company from $6 billion to $8 billion dollars, the bondholder might only agree to the debt-equity swap if GM merges with Chrysler. GM hasn't shared its exchange plan with the bondholders yet, so the stakeholders could change their minds once they have the information.
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posted : 4/26/2009 @5:06:40 AM
Wanted: Lender for 1,000 GM vans

Dave Capps is in the business of renting vans. In order for him to stay in that business, he needs to buy new vans – 1,000 of them, to be precise. And although he's been a GMAC customer for 20 years, remains in good standing, and gets much of his current inventory financing from GMAC, he can't get the credit he needs to buy the new vans. So Capps rented a billboard in Dallas to be an appeal to anyone willing to lend him the money. GMAC hasn't discussed why it won't give Capps the necessary credit. According to Capps, "GMAC said that they don't do vehicle loans and their new GMAC bank is prohibited from loaning money for vehicles. I have to take their word that they can't do that." We're not sure how that conversation went down, but if Capps really was told that newly minted bank holding company GMAC can't loan money for vehicles, well, we have a lot of questions.
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posted : 4/26/2009 @3:22:57 AM
Frayed Nerves: Is Porsche an automaker, or a hedge fund?Some analysts are wondering if Porsche isn't running itself more like the Blackstone Group than as an automaker. The option trades it used last year to take control of Volkswagen netted the German automaker €6.8 billion. The business of selling cars netted Porsche just €1 billion over the same period. And that's not all: Porsche made an additional €392 million trading shares in other companies on the German exchange. This has industry watchers trying to figure out how Porsche is looking to make its money, especially considering that its total stock exposure is €31 billion. Even though Porsche has valued its stake in VW at less than half the current value of VW shares, the concern is that VW shares are overvalued and another industry jolt could drive them below the price Porsche paid. And that has people wondering whether the ensuing writedown would cause the controlling Porsche and Piech familes to lose control of the company or inject personal funds to prop it up. Beyond those hypothetical concerns, Porsche has the real challenge of refinancing a debt that currently comes due at the end of March. With severely reduced cash flow from actually selling cars, Porsche might be looking at unconventional measures, or even the trading floor, to help it out. But after making jokes at the opening of the Porsche Museum that went 100% over budget, if Porsche CEO Wendelin Wiedeking is nervous about the company's financials, you'd never know it.
posted : 4/25/2009 @12:20:25 PM
BMW offering to make first two payments if you buy now

BMW is fishing for buyers in February and March, and its bait is to cover the first couple months of new-car payments. Right now, BMW is offering to pay the first two payments on selected models from its line, including versions of the 1 Series, 3 Series, 5 Series, 6 Series and X5 models. This incentive is available on both remaining 2008 and current 2009 vehicles and can be combined with low APR financing deals of 0.9% for up to 60 months on the '09s. The maximum payout is not to exceed $750 a month and the vehicle must be handled through BMW Financial Services.
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posted : 4/23/2009 @5:14:04 AM
REPORT: GM lobbying Congress for $7B in tax reliefAsk for a little help from the government, and the next thing you know you're asking for the government to protect you from the very help it's giving you. General Motors is restructuring its debt load by offering equity shares instead of cash to debt holders, namely the government and the UAW. The UAW transaction concerns the VEBA health care fund in that GM wants to pay its obligation to the fund with shares. The issue is that this transaction is a debt-asset swap and comes with a distressed asset tax (DAT) of $7 billion. The DAT was codified in 1986 to prevent companies from buying money-losing companies just to avoid paying taxes. In GM's case, the debt-asset swap counts as corporate income, but GM can claim it's 2008 losses against that income, greatly reducing its tax bill. If the tax isn't waived, GM will need to immediately return $7 billion of the money it was just given. It is talking to the Treasury Department, but so far it's been no dice. GM has been lobbying to have a waiver provision put in the economic stimulus bill currently being wrangled over in the Senate, yet there's also been no movement there, either. It's almost inconceivable that the government will demand GM pay the tax. It's equally hard to believe that this is even taking place.
posted : 4/15/2009 @10:23:09 AM
UAW agrees to suspend GM job banks on Feb 2The UAW idled Chrysler's jobs bank earlier this week, and as of February 2, the UAW and General Motors will shut down the job bank it also maintains for its workers. GM is paying the 1,600 workers currently in the system 85% of their on-the-job wages. As of February 3, they will receive a measure of supplemental pay from GM and can apply for unemployment, the total of which should come to 72% of their former pay. The move potentially leaves Ford's jobs bank as the only one left running, but Ford has yet to comment on its status.
posted : 4/11/2009 @5:47:54 AM
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