General Motors Corp (GM) said it would cut 21,000 US factory jobs by next year, phase out its storied Pontiac brand and ask the US government to take company stock in exchange for half GM’s government debt as part of a major restructuring effort needed to get more government aid.
The struggling automaker also said it would offer 225 shares of common stock for every US$1,000 in notes held by bondholders as part of a debt-for-equity swap.
The announcements came in a filing with the Securities and Exchange Commission (SEC) yesterday.
PHOTO: REUTERS
GM is living on US$15.4 billion in government loans and faces a June 1 deadline to restructure and get more government money. If the restructuring doesn’t satisfy the government, the company could go into bankruptcy protection.
GM said in a press release it would also ask the government to take 50 percent of its common stock in exchange for canceling half the government loans to the company as of June 1.
GM said the bond exchange would wipe away US$27 billion in unsecured debt if successful. The company estimates that after the exchange, bondholders would own 10 percent of the company.
In addition, GM is offering the United Auto Workers stock for at least 50 percent of the US$20 billion the company must pay into a union run trust that will take over retiree health care expenses starting next year.
All the stock offerings mean that current common stockholders would own only 1 percent of the company under the deals, the press release said.
GM owes US$28 billion to large and small bondholders, and under SEC rules, it must disclose its operational plans before making an exchange offer.
GM chief executive Fritz Henderson had said the company had to go further and faster in making its cost cuts to reduce the number of cars and trucks it needs to sell to break even.
The death of Pontiac, famous for the Trans Am sports car and the GTO, came after efforts in the last few years to market Pontiac as performance-oriented brand failed.
The company has said it wanted to keep Pontiac as a niche brand with one or two models, but is buckling under tremendous government pressure to consolidate its eight brands, several of which lose money.
Sources said GM wouldn’t have much new information on Hummer, Saturn or other brands, including Europe’s Opel. GM has said it wants to focus on four core brands, Chevrolet, Cadillac, GMC and Buick.
The government’s restructuring demands include swapping at least two-thirds of GM’s unsecured bond debt for equity in the company.
Such a move would help GM straighten out its debt-laden balance sheet.
INSURRECTION: The NSB said it found evidence the CCP was seeking snipers in Taiwan to target members of the military and foreign organizations in the event of an invasion The number of Chinese spies prosecuted in Taiwan has grown threefold over a four-year period, the National Security Bureau (NSB) said in a report released yesterday. In 2021 and 2022, 16 and 10 spies were prosecuted respectively, but that number grew to 64 last year, it said, adding that the Chinese Communist Party (CCP) was working with gangs in Taiwan to develop a network of armed spies. Spies in Taiwan have on behalf of the CCP used a variety of channels and methods to infiltrate all sectors of the country, and recruited Taiwanese to cooperate in developing organizations and obtaining sensitive information
BREAKTHROUGH: The US is making chips on par in yield and quality with Taiwan, despite people saying that it could not happen, the official said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has begun producing advanced 4-nanometer (nm) chips for US customers in Arizona, US Secretary of Commerce Gina Raimondo said, a milestone in the semiconductor efforts of the administration of US President Joe Biden. In November last year, the commerce department finalized a US$6.6 billion grant to TSMC’s US unit for semiconductor production in Phoenix, Arizona. “For the first time ever in our country’s history, we are making leading edge 4-nanometer chips on American soil, American workers — on par in yield and quality with Taiwan,” Raimondo said, adding that production had begun in recent
Seven hundred and sixty-four foreigners were arrested last year for acting as money mules for criminals, with many entering Taiwan on a tourist visa for all-expenses-paid trips, the Criminal Investigation Bureau (CIB) said on Saturday. Although from Jan. 1 to Dec. 26 last year, 26,478 people were arrested for working as money mules, the bureau said it was particularly concerned about those entering the country as tourists or migrant workers who help criminals and scammers pick up or transfer illegally obtained money. In a report, officials divided the money mules into two groups, the first of which are foreigners, mainly from Malaysia
SILICON VALLEY HUB: The office would showcase Taiwan’s strengths in semiconductors and artificial intelligence, and help Taiwanese start-ups connect with global opportunities Taiwan has established an office in Palo Alto, one of the principal cities of Silicon Valley in California, aimed at helping Taiwanese technology start-ups gain global visibility, the National Development Council said yesterday. The “Startup Island Taiwan Silicon Valley hub” at No. 299 California Avenue is focused on “supporting start-ups and innovators by providing professional consulting, co-working spaces, and community platforms,” the council said in a post on its Web site. The office is the second overseas start-up hub established by the council, after a similar site was set up in Tokyo in September last year. Representatives from Taiwanese start-ups, local businesses and
RSS