- The Washington Times - Tuesday, May 5, 2009

DETROIT — With just a month left to check off an almost insurmountable list of restructuring moves, General Motors Corp.’s new chief executive officer says it’s still possible that the company can finish everything and avoid following Chrysler into bankruptcy.

Frederick A. “Fritz” Henderson, who took over the troubled automaker when Rick Wagoner was ousted by the Obama administration, is keenly aware of what’s going on with Chrysler LLC in front of a U.S. Bankruptcy Court judge in New York.

“I think it’s still possible that we stay out of bankruptcy,” Mr. Henderson said Monday in an interview with the Associated Press. “Our preference is to accomplish our goals outside of the bankruptcy process. But if we’re going to go through one, then we’re going to learn from Chrysler’s experience.”

For its part, Chrysler got the go-ahead in bankruptcy court Monday to use $4.5 billion in government loans for bankruptcy financing while it works toward a sale of the company’s assets to Italian automaker Fiat.

Mr. Henderson, speaking inside his office on the 39th floor of one of GM’s office towers in downtown Detroit, also said a counteroffer from the company’s bondholders made last week is unacceptable because it doesn’t meet requirements imposed by the government.

A key issue for GM is getting 90 percent of its bondholders to accept a debt-exchange offer. GM is offering them a 10 percent stake in the company if they give up $27 billion in unsecured debt, but the bondholders have counteroffered seeking a 58 percent ownership stake.

Mr. Henderson essentially rejected the counteroffer, saying GM can’t do it because it has been told by the Treasury Department that it can’t give more than 10 percent equity to the bondholders.

“It’s outside of what the Treasury has told us they would support,” he said. “It’s about as factual as I can be.”

GM has been living on $15.4 billion in U.S. government loans as it struggles against the worst auto sales climate in more than two decades. The nation’s largest automaker faces a June 1 government deadline to finish restructuring or be forced into Chapter 11 bankruptcy protection. The Detroit automaker lost $30.9 billion last year.

To finish, it must cut its bond debt, cut labor costs and thin itself down to the point where the government believes it can be competitive.

GM said last week it would soon announce six more factory closures in North America as part of the restructuring, but it did not identify them.

Mr. Henderson said the restructuring should not have to go deeper than the six, which will include parts stamping, engine, transmission and assembly plants.

The company would like to negotiate manpower reductions because of the closures with the United Auto Workers union, which until last week was tied up negotiating a deal with Chrysler, he said. GM has said a new round of buyout and early retirement offers is likely.

Because of the Chrysler talks, GM is just starting to resume bargaining in earnest with the UAW for a concession agreement that likely will follow the pattern of one reached with Chrysler last week. That deal has the UAW taking a 55 percent stake in the new Chrysler in exchange for $6 billion of the $10.6 billion the company must pay into a union-run trust that will take over retiree health care expenses starting next year.

The UAW has no intention of keeping its 55 percent stake in the new Chrysler and will sell the shares to fund a trust that will take over retiree health care costs next year, Ron Gettelfinger, the union’s president, said Monday.

Mr. Henderson said GM will try to reach agreement with the union on the plant closures, contract language and funding the trust.

GM, which already has a concession deal with the Canadian Auto Workers, will go back to the union to seek parity with what it granted to Chrysler, Mr. Henderson said.

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