Rumours of GM future

[ltd]

This was taken from todays herald.

http://www.heraldsun.news.com.au/com...5E1702,00.html

The gist of it is thus,

Dollar up against GM speculation

27oct05

THE Australian dollar closed higher today among speculation that US car giant General Motors could be filing for Chapter 11 bankruptcy.

At 1630 AEST the local currency was trading at $US0.7571/74, above yesterday's close of 0.7557/60.
During the day's trade it reached a low of $US0.7525 and a high of 0.7586.

ANZ's senior currency strategist Craig Ferguson said the US dollar had weakened on the back of GM's rumoured impending Chapter 11 bankruptcy.

News confirming that GM and GMAC Financial Services were served subpoenas by the US Securities and Exchange Commission as part of an investigation into its accounting practices.



Mr Ferguson said the idea of bankruptcy was refuted by a GM spokesman as "absolutely untrue".

"That didn't stop the USD weakening about half a per cent in Asian trading, due to fears of a fall on Wall Street tonight," he said.

Apart of the GM news, it has been a quiet day, Mr Ferguson said.

"The focus going in to next week will be the (US) Fed and rasing rates and the likelihood of them raising rates which should support the US dollar and may cap any Aussie upside," he said.

On the local front, the Reserve Bank of Australia meets on Tuesday, but is not likely to raise interest rates.

At 1600 AEST the Australian dollar on the Reserve Bank of Australia's trade weighted index (TWI) was at 64.5 points compared to yesterday's close of 64.4 points.



This is not a gloating thread, just amazed though at how astute others have been in other threads.

Don't know what the immediate ramifications would be for Holden if GM did file for bankruptcy. I'd hazard a guess though that the US Government would do what they did with the airlines, and send billions in financial assistance, as the concertina effect could possibly cause a recession with the sudden surge in unemployment throughout the USA.

[Falcon Freak]

I discussed this a few people who are in the automotive industry. As GM is so large it employs people in many parts of the world. If GM's plight was so dire that they had to file for Chapter 11 bankruptcy protection then the flow on effects could be disastrous. If GM were to start letting go of people in large numbers it wouldn't be concentrated in only one location. Therefore it could trigger a global recession as many countries and regions could pontentially be impacted.

It is all speculation at this point im time. I hope that world oil prices fall soon to ease the pressure on the American Big Two so that they have an opportunity to restructure their organisations and also start producing better products.

FF

[Dave_au]

Filing for Bankruptcy in the United States under chapter 11 isn't as bad as what it sounds - United Airways and US Air have both filed for Chapter 11 protection. It's more akin to a cross between voluntary administration and receivership in Australia.

The word "bankruptcy" has negative connotations, and most people consider chapter 11 to be just a form of bankruptcy. In reality, however, the conventional meaning of the term "bankruptcy" does not apply to chapter 11. Chapter 11 provides the debtor a vehicle for operating its business under protection from its creditors while developing a plan for resolving its financial problems. In a successful chapter 11 case, the debtor is able to have a plan of reorganization confirmed that enables the debtor to operate successfully in the future, free from the burdens that precipitated its chapter 11 filing. In general, a chapter 11 plan is a contract among the parties in interest in the debtor’s chapter 11 case. If accepted by the requisite majorities of each class of affected creditors and equity owners and confirmed by the Bankruptcy Court, the plan is binding on all affected parties, even if they did not vote in favour of the plan. In certain circumstances, a plan may be confirmed even if some (but not all) classes do not accept the plan.

[XA Coupsta]

Originally Posted by Dave_au

Filing for Bankruptcy in the United States under chapter 11 isn't as bad as what it sounds

Exactly.

FF - I disagree with your belief of a 'global recession' if GM do go under.

[jabba]

My god I hope it is not true. Were would we be with Holden and the commodore. We ford fan need GM to stay alive other wise there is no competition for our fast fords to run against, and the main comp will comp from Toyota.. Christ what a terrible thought

[b2tf]

Originally Posted by jabba

My god I hope it is not true. Were would we be with Holden and the commodore.

Absolutely spot on. Even the Bluest of Blue Bloods have to accept that fact.

[jmc-007]

this is only the start fellas get used to it. :

There will be alot of other companies comming undone as well. Like enron but only bigger.

[RED_EL_XR8]

There was once a rumour that the sky was falling, treating it with contempt or ignoring it completely was the correct action at that time too.

[mik]

if gm shut up shop here heaps of jobs would go including mine, but i think they will be ok, nissan last year or the year before was in red for a similar amount and they are still up and running

[Danny]

And the other thing is too, that Falcon would finally come out in front of the commodore in terms of sales etc, But at what cost? I'd like to see falcon sales eclipse commodore on its own merits, rather than Bankruptcy on GM's part. It would be terrible, Our traditional compeditor for years, now gone.

[Stav]

Holden ironically is like my major client..(Boo ford!! :hihi: ) I see that since the fuel increases here in recent times that the car buyers are not buying as much. I believe it is the fuel prices and consumer fear which is causing this problem. If you are after a super v8 holden ..now is the time to buy...

[Black XR6]

Well I hope they can trade out of whatever sticky situation confronts them. If for nothing else than all the families who need their jobs to survive worldwide. I really cant see GM closing up shop. It may mean they offload a few of their other brands and scale down operations in some countries though.

[4.9 EF Futura]

Yeah some questionable transactions between GM and Delphi. SEC investigation appears to be the last thing they need. Chapter 11 would be interesting - can you imagine what it takes to restructure a company of that magnitiude?

Considering analysts who eat/sleep/breathe GM cant figure out what's going to happen, you'd be pretty game to come out and predict the outcome.

Having said this, GMH in australia should fair well. They are a strong, profitable company - although the $$$ involved here in Australia are a drop in the ocean for a US company with something along the lines of $20 billion in cash reserves alone. IF GM decided to sell up GMH, im sure there'd be plenty of interested parties.

[Homer1]

Originally Posted by 4.9 EF Futura

IF GM decided to sell up GMH, im sure there'd be plenty of interested parties.

Toyota, being the most loaded will be one of them......can you imagine??? A grandpa in a LS1 powered FWD Camry!!! Now that's a scary thought!!

[4.9 EF Futura]

Originally Posted by Homer1

Toyota, being the most loaded will be one of them......can you imagine??? A grandpa in a LS1 powered FWD Camry!!! Now that's a scary thought!!

Even scarier... Shazza and dazza going to the pokies in a toyota quad cam V8 powered commodore!

[SSBUB]

I will defect to the blue side should FWD be the competition and holden bust.

[parawolf]

GMH wouldn't go under. They would either operate in their own right with massive Aust govt subsidies, or be able to sustain themselves, or they would then drop GM part of GMH, and basically start see a greater share of their parts come from China and Korea to be assembled locally (if at all). However the second GMH does this off shore assembly, FoA would do it in a heartbeat too.

However I can see in the next 5 years that Commodore and Falcon will be locally assembled vehicles, however if I was a betting man, 2011 would be the year of the imported Falcon. Manufacturing costs cannot be ignored for ever. Building new facilities here in Australia doesn't make logisitical sense unless the state and federal governments chip in massive coin for a company like FoA. A company like Toyota can afford to build new facilities because they are bigger than Ford and GM put together (or has more $ in the bank).

[MITCHAY]

Would Holden have the resources to become independant should GM go under?

[Steffo]

Originally Posted by MITCHAY

Would Holden have the resources to become independant should GM go under?

No. If GM goes down, Holden is going down with it. There are 50 gazillion contracts and other legal happenings that prevent them from breaking away independantly, take for example, the Commodore as it is in VZ form. Its a stretched Opel Omega with a Cadillac V6 engine they build here (HFV6 debuted in Caddy) and a Chevrolet 5.7 and 6.0litre V8 they import with a GM four and five speed automatic. If they were to somehow get past all the legal crap and break away, they'd need to find themselves a new V6, new V8s, new autos etc etc.

[4.9 EF Futura]

Originally Posted by MITCHAY

Would Holden have the resources to become independant should GM go under?

They'd need someone to buy GMH. Another manufacturer/company or float it on the ASX (dunno about you guys, but doubt i'd buy stock). Chances are, they would still be able to buy stuff from GM if needed (i.e. LS2).

I doubt GMH would have cash reserves sufficient to "buy themselves" out from parent company.

[Steffo]

Originally Posted by 4.9 EF Futura

I doubt GMH would have cash reserves sufficient to "buy themselves" out from parent company.

Give GM a few years... and who knows... everyone will be buying things from them so they can get every last dollar...

[aualright]

Originally Posted by MITCHAY

Would Holden have the resources to become independant should GM go under?

Wouldn't think so...I'd imagine the creditors would have their sights set on getting their money back and Holden's plant and manufacturing equipment would be one of the things they'd flog.

If only Goodwill was worth something to these creditors, as we know Holden thrives on the loyalty from their customers. Put a Holden badge on anything and it seems to sell well (Vectra excluded) - but probably worth nothing to the creditors.

Holden will be history if GM can't be saved, imo.

[Black XR6]

The smart thing would be to sell GMH as a whole. They are a profitable company with a very loyal customers. Would be worth more that way then sold off in parts.

[parawolf]

Originally Posted by Black XR6

The smart thing would be to sell GMH as a whole. They are a profitable company with a very loyal customers. Would be worth more that way then sold off in parts.

Without a doubt. Profits from Holden, profits from Daewoo, and successful infrastructure at both locations. Could almost see Chrysler buying Holden - or VW.

[4Vman]

Im pretty sure GMH as we knew it divisionalised into stand alone seperate Companies (business units) a few years ago to protect a large part of their AUS operations from this very problem..
HECC: "Holden Engine and Component Company" is one division. I think there are 2 others from Memory?

[VilkasBAMIIXR6T]

GM's sales in the USA. What sort of percentage have they declined? I know that the seppos have had their car market driven by trucks for years. Have the seppos finally got over their love affair for these? Or have the asian imports and locally produced Hondas/Toyotas finally made huge inroads into their sales?
I cannot see GM being liquidated, perhaps downsized. Hopefully enough so Ford World can become the biggest car company!!

Go FORD!!!

[paul7v7]

Ford isn't far behind GM. They're in a shocking state and have no way near as many products for the future.

[Dave_au]

From the Financial Review:

GM woes spook Wall St
Oct 28 06:21
AFP

US shares tumbled overnight amid growing concerns over the implications of an ailing General Motors and speculation about a possible indictment of key Bush administration officials also weighing on sentiment.

The Dow Jones Industrial Average skidded 1.11 per cent, or 114.71 points, to 10,230.27 and the Nasdaq composite sank 1.73 per cent, or 36.24 points, to 2,063.81 at the closing bell.

The Standard & Poor's 500 index retreated 1.05 per cent, or 12.45 points, to a preliminary close of 1,178.93.

News of a probe into GM accounting raised fresh concerns about the prospects for the auto giant and even sparked renewed talk about bankruptcy, which the automaker brushed aside.

GM shares were down 6.8 per cent.

"The news overnight about GM really spooked the market," said Jim Awad, chairman of Awad Asset Management.

"It was a reality check for people. We have a large company on the ropes and its downfall would have implications for the financial system and for the company's suppliers."

In addition, the market is worried about the possible indictment of key Bush administration officials over the disclosure of the identity of a CIA agent.

"It not only damages the Bush agenda which is favourable for the capital markets, but when we went through this with Nixon in the seventies, it started to affect business-consumer psychology," Awad said.

[MX837M-GE]

Chapter 11 would be good for GM in my opinion. They could use it to get their stuff together with the unions (in the USA) that are raping the company dry. In this sense, as pointed out earlier, chapter 11 is an almost more of a political rather than an accounting term.

As the share price plunges, the chances that Kirkoran (or whatever his name is - the billionaire investment guru that has been snaping up millions of shares in GM, now has 10% stake) will take the show over increase. With him in charge, I'd say that company could be put back on track very quickley indeed.

GM has a very healthy balance sheet, even if Delphi ends up costing it $11bn (the highest of estimates). It has nearly $30bn in cash, and options on borrowings worth $50bn. It will not go down quickley.

[4Vman]

Originally Posted by MX837M-GE

Chapter 11 would be good for GM in my opinion. They could use it to get their stuff together with the unions (in the USA) that are raping the company dry. In this sense, as pointed out earlier, chapter 11 is an almost more of a political rather than an accounting term.

As the share price plunges, the chances that Kirkoran (or whatever his name is - the billionaire investment guru that has been snaping up millions of shares in GM, now has 10% stake) will take the show over increase. With him in charge, I'd say that company could be put back on track very quickley indeed.

GM has a very healthy balance sheet, even if Delphi ends up costing it $11bn (the highest of estimates). It has nearly $30bn in cash, and options on borrowings worth $50bn. It will not go down quickley.

Im pretty sure Donald Trump filed chapter 11 recently and used it to shield himself from bankruptsy while he resurected himself and got back on his feet.
Now he's business as usual.. "you're fired".