Court lets GM sell US assets by next month
June 3, 2009
By Linda Sandler, Chris Scinta, Bob Van Voris and Jeff Green New York
General Motors (GM) won court approval on its first day in bankruptcy to sell assets as soon as next month after collapsing under $172.8 billion (R1.38 trillion) in debt and failing to adapt to consumer demands for smaller cars.
The car maker won permission yesterday from Judge Robert Gerber in Manhattan to draw $15bn from a $33.3bn bankruptcy loan.
Sapa-AP reported that GM's German unit, Opel, yesterday received the first E300 million (R3.4bn) instalment of a bridging loan from the German government, a key part of a deal to shield Opel from its parent's bankruptcy protection filing.
The lead bidder for the US assets is the Treasury, which will provide the 100-year-old firm with billions in loans to be converted into a 60 percent equity stake. Detroit-based GM plans to form a new company in 60 to 90 days, built around its Cadillac, Chevrolet, Buick and GMC brands in the US.
"There's only one prospective purchaser," GM attorney Harvey Miller told Gerber, referring to the US government. "There's no (other) entity that has the wherewithal to bid."
The car maker missed Monday's deadline to show that it could reorganise outside court, and reported debt of more than twice its assets.
GM listed its top creditors as Wilmington Trust, representing bondholders owed $22.8bn; United Auto Workers, owed $20.6bn; and Deutsche Bank, representing bondholders owed $4.44bn.
GM's Saab unit is reorganising in Sweden. On Saturday the German government picked Magna International as the preferred bidder to buy Opel. Magna will take 20 percent and state-controlled Russian lender Sberbank 35 percent, giving their consortium a majority.
GM would retain 35 percent, and the remaining 10 percent would go to Opel staff, AP said.
Before declaring bankruptcy, GM received $20.6bn in US Treasury loans, according to court filings. Administration officials said yesterday that the government would advance $30bn more, with another $9.5bn from the Canadian government.
Aside from the US government share, GM's statement called for a worker health care fund to get 17.5 percent and the Canadian government to take 11.7 percent. Bondholders would be eligible for 10 percent and warrants to buy another 15 percent.
An administration official said last week that the new firm might remain private for as long as 18 months. - Bloomberg
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