General Motors bankruptcy brings big gamble by Obama - bizjournals:

GE AJCS06LCC
The restructuring is a gambl e by the Obama Administration thatthe U.S. government can take a majorith stake in aniconic manufacturer, help it regaihn some of its former glory -- and then get out. But the move alread y has its skeptics. “The only thing it makes clear is that the governmeng is firmly in the business of runninfg companies using taxpayer said U.S. House Minority Leader John “Does anyone really believe that politicianas and bureaucrats in Washington can successfully steer a multinational corporationj toeconomic vitality? It’s time for the administration to fully explaibn what the exit strategy is to get the U.S.
government out of the boarcd room once andfor all.” The government will own some 60 percent of a revamped G.M. Its ownership stakre will give government officials more power to name members of the GM But President Obamahe doesn't want to get involved in the dail operations of the company. And no one'z overjoyed at the investment. "We are actin as reluctant shareholders," Obama "What I have no interest in doin g isrunning GM." Instead of havintg politicians taking an active role, the president a professional management team wouldx lead GM as it works throug h bankruptcy and builds a more viable company for the future.
“The federal government will refrain from exercising its rights as a shareholderr in all but the most fundamentalkcorporate decisions,” Obama said. “When a difficult decisiojn has to be made on matters like wher e to open a new plant or what type of new car to thenew G.M., not the United States will make that decision. “In short, our goal is to get G.M. back on its take a hands-off and get out quickly,” he said. But that may provs to be quite a challenge with as much governmenyt money asis involved.
Bruc e Belzowski, associate director of the Automotive Analysisw Division at the University of Michigan Transportation Research told bizjournals in atelephone interview: "If they had a it would be a short period of time. The longeer that it stretches out the more of a political liabilittyit becomes.” And there will be plentu of watchdogs alert for any government interferencwe in day-to-day GM operations. “We will exposse and fight any counterproductivew influenceby government, unions or politicians over decisionsd that should be left to management,” said U.S.
Chamber of Commerce President and CEOTom “And we will continually insist that governmeng reduce and eliminate its ownership stake as soon as It will take time beforew the government is able to extricatre itself from such a large stake in the automaker. It coulc take more than a yearbefore G.M. emerged once more as a publicly traded and shares in the company will have to rise high enoug h to make sellingthem profitable. "This is a questiob of years, not months," said GM CEO Fritz The filing, made in U.S. Bankruptcy Court in Manhattan, marksx the fourth-largest bankruptcy for a U.S.
It follows months of speculation thatthe 101-year-old company wouldf have to restructure through the courts, despite desperat e attempts by management to avoid the And the filing carried with it enormous historical implications. "It's not just any compangy we're talking about, it's GM," said Obama. Obama called the company's filing and restructurint plan, "the end of an old GM and the beginninb of anew GM." As it turned out, the bankruptcy filing was the only way GM coulcd get its hands on the government money it needs to In its filing, GM listed $82.4 billion in assets and $172.8 billiob in debts.
The company's largest creditors were WilmingtojTrust Company, representing bondholders holding $22.8i billion in debts, and UAW affiliates representing $20.6 billio n in employee obligations. The U.S. governmenyt has already injected $20 billion into GM, and will provides another $30 billion to keep the compangy going as it works through The investment will buy the governmentg a 60percent stake. The governments of Ontario and Canadq will take smaller stakes in thenew company.