General Motors will have an announcement on Monday - bankruptcy or no bankruptcy. GM, which has received $19.4 billion in federal loans, failed to persuade enough bondholders to accept a debt-for-equity swap of $27 billion in unsecured debt for 10 percent of the company's stock. Not only are bondholders losing a fortune, there is no promise on what the stock of the restructured company will be worth. This essentially means that the stage is set for the largest-ever U.S. industrial bankruptcy.
Can GM get 90 percent bondholder support to stave off bankruptcy before Monday? What would sway them in favor after so many rejections? Maybe a larger piece of the new company? GM reached an agreement on Tuesday with the leadership of the United Auto Workers (UAW) union.
Government restructuring outside of the courts or court-run Chapter 11 bankruptcy, GM will emerge much leaner. GM employees say "they are fighting hard" focusing on their core brands with fewer dealers and fewer nameplates. The news on Hummer's winning bidder will be followed by the announcement of new owners for GM's Saturn and Opel brands and the Swedish's government's decision on the fate of Saab.
The June 1st news on the bankruptcy decision will come a day before the May auto sales are released, which, based on yesterday's report that the Conference Board's index of consumer confidence for May jumped to 54.9 from 40.8 in April, could mean good sales data will come a day too late to save GM from bankruptcy.
In vehicle news - Cadillac announced today that the 2010 SRX Crossover, scheduled to begin production this summer, will be priced starting at $34,155 coming with all-wheel-drive and a 3.0-liter Direct Injection V6 engine. Later this summer, CTS Sport Wagon arrives with the same standard 3.0-liter Direct Injection V6 engine with highway fuel economy is estimated to reach 28 mpg.
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