GM CEO Fritz Henderson has told reporters that it is now ‘more probable’ that GM will enter bankruptcy in the US, though he also said ‘there is still a chance for it to be done outside a bankruptcy’.
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In a weekly press conference called to update the media on GM’s restructuring plans he also said that GM would start notifying its dealers this week on its plan to eliminate about 2,700 dealerships by 2010.
“That specific plan is being finalised here early this week, and we’ll began notifying dealers later this week,” Henderson said.
Analysts say that filing for Chapter 11 is becoming more likely for GM given the difficulty it is having in securing agreements from bondholders, who are unhappy with the equity for debt they are being offered. GM wants bondholders to agree to take a 10% stake in exchange for US$27bn of debt.
“The government didn’t support us going above 10%, so we went to the maximum that they would allow us,” Henderson said of the debt exchange offer.
The UAW stands to get a 39% stake in a new GM company related to concessions on the union-managed health trust. The US government would take a majority stake.
Henderson also said that GM aims to choose a preferred bidder for its European operations by the end of May, echoing recent remarks from Fiat’s Sergio Marchionne suggesting that a deal in May is being aimed for.
See also: GM Ch11 – the odds are shortening
