U.S. officials have told Reuters that General Motors will file for bankruptcy early Monday morning before the markets open. The bankruptcy filing of the 100-year-old automaker will be the third-largest in U.S. history and the largest ever in a U.S. manufacturing market.
Officials said that the U.S. will push GM into a fast-track bankruptcy, which should be completed in 60 to 90 days. The automaker will get $30 billion of additional taxpayer money to restructure a smaller-company that will compete with foreign automakers. The governments of Canada and Ontario have also agreed to provide another $9.4 billion to GM.
“The immediate implication is that the companies are going to get smaller and so market share is up for grabs, which means that rivals like Toyota, Honda, Nissan and Hyundai are going to gain share,” said Christopher Richter, an auto analyst at CLSA Asia-Pacific Markets.
If both automakers fail to become competitive against foreign automakers “we’ll be doing this all over again in a few years.”
The Obama administration will be taking the majority stake in the restructured GM with a total of 60 percent. UAW will have 17.5 percent while the Canadian government will have 12 percent. GM bondholders will take a 10 percent stake.
In a brief statement released yesterday, GM said.
“President and CEO, Fritz Henderson, will host a press conference, beginning immediately following President Obama’s media briefing. According to a White House media advisory, President Obama will begin his remarks at approximately 11:55 a.m. EDT. Mr. Henderson will address media separately from New York following the President, beginning at approximately 12:15 p.m. EDT.”
– By: Omar Rana