At a news conference this morning, General Motors unveiled its plan that saw its stock shoot up 25% and as of this writing stands 21% higher. Apart from getting rid of the Pontiac brand by next year, the automaker also reported to eliminate 42 percent of its dealers, close 13 plants and cut 21,000 hourly jobs. NYT reports:
By the end of next year, it plans to employ 40,000 hourly workers at 34 plants, down from 61,000 workers at 47 plants. That is at least 7,000 more job cuts and one more plant closure than the February plan called for. An additional 2,000 jobs would be cut in 2011.
Fritz Henderson, CEO, said the task they’re asked to do is not very difficult. He also said another $11.6bn in funding is needed. On the debtholders, bankruptcy is expected to be filed if negotiations with the creditors are unsuccessful. The firm is also offering 225 shares, worth $414 as of Friday, for every $1,000 that they hold, setting May 26 as the deadline for them to accept the offer or bankruptcy might just really happen.
Emerging from the bankruptcy would make the Treasury and UAW the owner of 89% of GM’s stocks while the other debtholders only up to 10%. A measly one percent will be left for current shareholders.