Vulpix
05-31-2009, 08:51 PM
Stricken General Motors to file for bankruptcy
(http://www.dailymail.co.uk/money/article-1189918/Stricken-General-Motors-file-bankruptcy.html)
The bankruptcy of General Motors is expected to send a shiver of fear through financial markets today.
The stricken American car giant will this morning file for protection from its creditors, who last night agreed to exchange their loans for new shares.
Although widely expected, the move could undermine the tentative recovery seen on bond markets over recent months.
Coming just eight months after the traumatic collapse of Wall Street bank Lehman Brothers, GM's bankruptcy could drive up borrowing costs on wholesale money markets.
Investors could demand a higher price for lending to large corporations after seeing GM's creditors sustain mammoth losses.
Under the debt-for-equity swap rubber-stamped by more than half of creditors last night, bondholders will end up with a maximum of 25 per cent of the group in return for tearing up ?14billion of debt.
Analysts at Barclays Capital believes that bondholders can expect to recover no more than ten cents in the dollar on their investments.
The GM bankruptcy will rank as the third largest in U.S. corporate history after the collapse of Lehman in September and telecoms giant WorldCom in 2002.
Meanwhile, the fate of 5,500 Vauxhall workers in the UK was still hanging in the balance last night.
GM Europe, which includes Vauxhall and Opel in Germany, was saved from collapse by a consortium headed by Canadian auto parts firm Magna.
Magna is planning to cut as many as 11,000 workers across Europe - around one in five of the workforce.
Unions fear UK plants at Ellesmere Port in Cheshire and in Luton could bear the brunt of the pain.
After pledging a ?1.4billion loan to the Magna consortium, the German government has secured concessions for its car industry. Just 2,600 German workers will be axed from Opel's 25,000 workforce.
Some car production is expected to shift to Russian oligarch Oleg Deripaska's car maker GAZ in Russia.
Russian state-owned bank Sberbank has pledged hundreds of millions of dollars in loans to the Magna rescue in return for a rumoured 35 per cent stake in Vauxhall and Opel.
(http://www.dailymail.co.uk/money/article-1189918/Stricken-General-Motors-file-bankruptcy.html)
The bankruptcy of General Motors is expected to send a shiver of fear through financial markets today.
The stricken American car giant will this morning file for protection from its creditors, who last night agreed to exchange their loans for new shares.
Although widely expected, the move could undermine the tentative recovery seen on bond markets over recent months.
Coming just eight months after the traumatic collapse of Wall Street bank Lehman Brothers, GM's bankruptcy could drive up borrowing costs on wholesale money markets.
Investors could demand a higher price for lending to large corporations after seeing GM's creditors sustain mammoth losses.
Under the debt-for-equity swap rubber-stamped by more than half of creditors last night, bondholders will end up with a maximum of 25 per cent of the group in return for tearing up ?14billion of debt.
Analysts at Barclays Capital believes that bondholders can expect to recover no more than ten cents in the dollar on their investments.
The GM bankruptcy will rank as the third largest in U.S. corporate history after the collapse of Lehman in September and telecoms giant WorldCom in 2002.
Meanwhile, the fate of 5,500 Vauxhall workers in the UK was still hanging in the balance last night.
GM Europe, which includes Vauxhall and Opel in Germany, was saved from collapse by a consortium headed by Canadian auto parts firm Magna.
Magna is planning to cut as many as 11,000 workers across Europe - around one in five of the workforce.
Unions fear UK plants at Ellesmere Port in Cheshire and in Luton could bear the brunt of the pain.
After pledging a ?1.4billion loan to the Magna consortium, the German government has secured concessions for its car industry. Just 2,600 German workers will be axed from Opel's 25,000 workforce.
Some car production is expected to shift to Russian oligarch Oleg Deripaska's car maker GAZ in Russia.
Russian state-owned bank Sberbank has pledged hundreds of millions of dollars in loans to the Magna rescue in return for a rumoured 35 per cent stake in Vauxhall and Opel.