GM bankruptcy

U.S. Taxpayer bails out GM, now China Gets a Piece?

At first blush most people will probably be outraged China would buy a stake in GM. This is from the impending IPO (or initial public offering).

In a sign of the changing fortunes of the world's top two economies, China's biggest auto maker, SAIC Motor Corp., is negotiating to acquire a stake of about 1% in General Motors Co. worth about $500 million, according to a person familiar with the matter.

The U.S. auto maker also is prepared to sell more than $1 billion worth of shares to sovereign wealth funds in the Middle East and Asia. Combined, the sales would give foreign investors roughly 16% of the shares to be sold next week under an initial public offering of stock, and give them a stake of some 4% in the Detroit auto maker.

Pretty incredible huh? We bail out GM and now China buys a piece? That said, with the impending trade war and considering GM's sales and existing joint ventures in China this should come as no surprise.

Shame the government didn't do a better job of negotiating U.S. jobs in the bail out mix.

GM's IPO is due to be priced next Wednesday:

Here's a bit of good news, GM to pay back the government

Looks like GM has recovered (unlike Detroit):

General Motors Co., steadily returning to health after its near-collapse in 2009, said Tuesday it plans to pay off its government loans by June — five years ahead of schedule — and could report a profit as early as this year.

Remember all of the controversy and blasting of the U.S. auto industry?

Here is the past and current financial situation. GM may report a profit this quarter.

GM gets more money to declare bankruptcy and offshore outsource the jobs?

GM is getting yet another $4 billion of U.S. taxpayer money. This makes their bail out loan total $19.4 billion. This figure does not include the Canadian taxpayer money also given to GM.

Yet GM is heading towards bankruptcy at the end of the month. Supposedly the bankruptcy is a show down with GM bondholders and investors, but why pump more U.S. taxpayer money into a company that is planning to offshore outsource the jobs?

GM has already stated their intent to offshore outsource 98% of production, as part their (government approved) restructuring plans.

Do you want your taxpayer dollars going to a company who is busy squeezing workers and planning to offshore outsource their jobs?

Creditors likely to force GM into bankruptcy

In a world before credit default swaps, it was in the best interests of creditors to avoid bankruptcy. But in today's world of casino financing, forcing companies into bankruptcy has become a profitable enterprise.

Hedge funds and other investors stand to make billions of dollars on credit insurance contracts if GM declares bankruptcy, a prospect that is complicating efforts to persuade creditors to agree to a restructuring plan for the automaker, analysts say.

Holders of $27bn in GM bonds have until June 1 to decide whether to swap their debt for a 10 per cent equity stake in the company as part of an offer that would give the US government 50 per cent of the shares, a United Auto Workers union healthcare fund 39 per cent and existing shareholders 1 per cent.