General Motors is now looking into slashing jobs, closing plants and retiring the old Pontiac brand. With no real silver lining to the dark cloud of recession, GM will most likely not be able to pay off the $10 billion it owes the government in loans. It’s future rests mostly on its creditors and the Obama administration.
CEO Fritz Henderson said that GM will offer the Treasury Department more than 50% of its stock in lieu of the loans. GM also proposed that the United Auto Workers take its share of what the company owed to the trust. With that, GM will effectively become a government-run company with 89% of its shares going to the government and the union.
GM has been in the red for the good part of the decade losing billions each year. To date, GM owes more $62 billion in debt spread across creditors.
The White House, however, believes that the auto industry should be able to stand on its own and that the administration is not keen to own an auto company. Press secretary Robert Gibbs said, “This administration has no desire to run an auto company on a day-to-day basis. We strongly back an auto industry we believe can, and should, be self-reliant of government funding.”
Source: MSNBC
