GM to announce brand changes, restructuring moves

GM to announce brand changes, restructuring moves
AP


DETROIT – General Motors Corp. will announce details of its massive restructuring plan on Monday, including the demise of its storied Pontiac brand, more factory closures and bigger job cuts as it fights to avoid bankruptcy protection.

The struggling automaker must make the announcement in advance of a planned offer to its bondholders to swap debt for company stock. GM owes $28 billion to large and small bondholders, and under Securities and Exchange Commission rules, it must disclose its operational plans before making an exchange offer.

Two people briefed on GM's plan said the company has decided to close more factories than the five it announced in February. But the locations of the doomed factories will not be identified Monday, said the people, who asked not to be identified because the plan has not yet been made public.

One of the people said GM will list specific numbers of blue-collar job cuts, and announce another round of U.S. salaried job cuts beyond the 3,400 completed last week.

Chief Executive Fritz Henderson has said the company will go further and faster in making its cost cuts to reduce the number of cars and trucks it needs to sell to break even. One of the people briefed on the plan said GM will accelerate many cuts previously planned for 2014 to instead take place between now and 2010, although specifics were not available.

Both people confirmed that the plan includes the death of Pontiac, famous for the Trans Am sports car and the GTO. Efforts in the last few years to market Pontiac as performance-oriented brand failed to work. The company had 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.

The people said GM won't have much new information on Hummer, Saturn or other brands, including Europe's Opel. GM has indicated it wants to focus on four core brands, Chevrolet, Cadillac, GMC and Buick.

Also to be announced Monday will be a target number for dealer reduction, as well as details of GM's bond exchange offer. But exact numbers were not available Sunday night.

The 9 a.m. EDT news conference will include Chief Executive Fritz Henderson, Chief Financial Officer Ray Young, North American President Troy Clarke and Mark LaNeve, vice president of North American sales and marketing.

GM is living on $15.4 billion in government loans and faces a government-imposed June 1 deadline to restructure or go into bankruptcy protection.

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.

Chrysler LLC, which is living on $4 billion in government loans and is expected to get $500 million more, faces a Thursday deadline to restructure and ink an alliance deal with Italian automaker Fiat SpA. The government also wants Chrysler to exchange much of its $6.9 billion in debt for equity in the company, but with the deadline fast approaching, Chrysler and its secured debtholders remain far apart.

Both GM and Chrysler also must win concessions from the United Auto Workers union. The UAW said late Sunday that it had reached agreement on concessions with Chrysler, Fiat and the U.S. government. Fiat CEO Sergio Marchionne was in the U.S. as talks continued for the automaker to take a 20 percent stake in Chrysler in exchange for its small-car technology.