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GM shares approach vanishing point as bankruptcy looms
Published in Saudi Press Agency on 29 - 05 - 2009

General Motors shares dropped below 1 dollar today as the country's largest car maker nears bankruptcy, while shares were going for 90 cents on Wall Street, according to dpa.
With the US government expected to take over more than 70 per cent
of the country's largest car maker, shareholders must reckon that
value will drop to zero.
Intense discussions with creditors continued as the Monday
deadline approached - the date by which GM must show the government
it is financially viable or enter bankruptcy.
Giving a glimpse of future plans as it adapts to the need for more
fuel efficiency vehicles, GM Friday announced it would retool a
mothballed factory to produce a new small car to add to its fuel
efficient fleet that includes Chevrolet Cruze and Volt.
Plans call for production of 160,000 vehicles from the reopened,
re-tooled assembly plant that could also handle compact cars.
GM's expected journey through bankruptcy protection will be the
fourth largest ever in US financial history.
The company has already received 20 billion dollars from
Washington to keep head above water, and is expected to receive
another 30 billion dollars. In exchange the government is to get 72.5
per cent ownership in the vaunted century-old company that has lost
its status as world's largest producer to Japan's Toyota.
Creditors are being offered a 10 per cent stake in the company
with the ability to buy another 15 per cent later, in exchange for
giving up the 27 billion dollars owed them by GM. One group
representing 20 per cent of the creditors has reportedly signed off
on the deal, but there were 300 challenges filed in bankruptcy court
against the plan.
The United Auto Workers are to receive 17.5 per cent of the
company in exchange for concessions on benefits and wages.
After all is done, including the impending sale of GM's European
Opel concern to Canadian car parts manufacturer Magna, GM's workforce
is expected to drop another 35,000 people for a total of 200,000
remaining employees with the closure of another 14 assembly plants -
or about half its work force from a decade ago.
Through bankruptcy, the new GM company is to throw off the debt
weighing down its ability to streamline production and workforce and
develop newer, more fuel efficient cars being demanded by North
American drivers.


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