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General Motors posts

How much of an exit package should Richard Wagoner get?

Nearly four months after being pushed out as CEO, former General Motors head honcho Richard Wagoner is still officially an employee of the company. The reason? The company is still trying to figure out how much it has to give him to go away and keep his mouth shut.

The Wall Street Journal
reports (subscription required) that "GM is keeping Mr. Wagoner on staff -- albeit only technically -- as the government decides on pay and benefit criteria for the company's top officers, obligations that will be the responsibility of the new GM once it emerges from bankruptcy protection, company spokeswoman Julie Gibson said."

Wagoner could be eligible for pension benefits valued at around $20 million, but GM and the United States government have concluded that that's simply too much to pay someone for destroying a company.

It's not yet clear how much Wagoner will end up settling for but one thing is certain: It will be far, far more than he would receive in any merit-based system.

If Richard Wagoner gets a Greyhound bus ticket to haul himself back to Delaware, it will be way, way too much.

What will happen to old General Motors shares when the new company goes public?

Last week I wrote about the plans for a General Motors IPO in 2010, which led to some confusion: General Motors has been publicly traded for nearly a century, so what's all this about an IPO?

One commenter asked "Does anyone know if you own GM stock now, and they have a new IPO what happens to your existing shares of the stock?"

The answer is a sad one, but here it is: The shares of the old GM will be "canceled" as part of the bankruptcy and only the shares of the new GM that can be purchased during and after the IPO will have any value. Shares of General Motors are still trading on the over the counter market for around 65 cents per share -- perhaps as a result of the confusion surrounding the bankruptcy. But it's extremely unlikely that those shareholders will get anything as part of the bankruptcy.

The reason is that shareholders always come last after creditors in a bankruptcy situation, and there isn't enough value in GM to make all the parties that are owed money whole. Because of that, there is nothing for shareholders.

Ford ramps up U.S. production as competitors recover from bankruptcy

The domestic automakers have all but given up and declared bankruptcy in an effort to survive in some form. Chrysler is about through its process, and GM is well on its way to becoming a completely new company. The standout: Ford Motor Co. (NYSE: F).

Ford is not only doing much better than the competition (and has been for a few years now), but it's actually increasing auto production while the bankrupt competitors are having a hard time getting rid of old inventory and shutting down dealers.

Continue reading Ford ramps up U.S. production as competitors recover from bankruptcy

Oil down, futures down following holiday weekend

When oil lost almost $3 a barrel, stock futures indicated a lower opening for today. Just shy of 5 AM, S&P 500, Down Jones, and Nasdaq 100 futures were all off 0.9%. The drop in oil to $64 a barrel has called into question any projections of a quick economic recovery -- as if high unemployment weren't enough. The Monday after any long weekend is hard, and this one's going to hurt.

The direction in which futures are pointing continues Thursday's equity declines in the United States, bringing the S&P 500 its third consecutive weekly loss. For the day, it lost 2.91%. The Dow Jones Industrial Average lost 2.63% of its value, with the Nasdaq Composite Index giving up 2.67%. Year-to-date, the DJIA is down 5.6%, the S&P 500 down 0.8%.

Continue reading Oil down, futures down following holiday weekend

The hot new IPO of 2010: General Motors

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:

Continue reading The hot new IPO of 2010: General Motors

Auto sales show signs of stability

Auto sales continued to drop in June, but we are starting to see signs that sales may be beginning to stabilize a bit.

The auto industry is still in deep trouble. It is going to take a while before things get back to normal, but before things can even start to improve, they have to stop worsening, and that's what may be happening.

Continue reading Auto sales show signs of stability

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.

Continue reading Lee Iacocca suggests Chrysler return the government loan soon

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.

Continue reading My portfolio won't be test-driving CarMax

One law firm gets a $54 million cut of General Motors bankruptcy

The General Motors bankruptcy has been tough on most of the company's constituents, but not on its lawyers.

The Wall Street Journal
reports (subscription required) that "Weil, Gotshal & Manges LLP earned $54 million in fees and expenses in the six months leading up to the auto maker's June 1 bankruptcy filing, according to a recent court filing by Weil Gotshal. Much of the $54 million didn't relate strictly to GM's Chapter 11, according to a Weil lawyer. The firm's lawyers are billing GM at a rate of $355 to $950 per hour."

The firm is trying to become lead debtor's counsel for the GM bankruptcy but hasn't yet received court approval. GM's other top two law firms earned a combined $26 million in fees.

Continue reading One law firm gets a $54 million cut of General Motors bankruptcy

Carl Icahn gets a second chance to acquire Delphi

Activist investor Carl Icahn is reportedly interested in taking another run at Delphi Corp. after a federal judge ordered the bankrupt auto parts supplier to open the sale of its assets to potential bidders, in addition to the previous offer from private-equity firm Platinum Equity.

Icahn's auto-parts company, Federal-Mogul Corp. (NASDAQ: FDML), had held discussions with Delphi, but the Presidential Task Force on the Auto Industry, which was set up by the Obama administration to oversee the restructuring of the U.S. auto industry, preferred the Platinum Equity deal.

Continue reading Carl Icahn gets a second chance to acquire Delphi

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

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."

Continue reading Lobbying pays off big for car dealers

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)

Continue reading If GM liquidates, everyone loses

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Last updated: July 11, 2009: 02:45 AM

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