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DETROIT, Michigan: General Motors is expected to announce its speedy exit from bankruptcy protection Friday through the sale of its best assets to a new automaker in which the US government will hold a majority stake.
CEO Fritz Henderson is scheduled to host an hour-long press conference at 9:00 am (1300 GMT) Friday at the automaker's Detroit headquarters.
It will come less than a day after a court cleared the way for the asset sale despite some 850 objections from creditors and a last-minute appeal by the family of a car accident victim.
In an effort to show transparency in the proceedings, GM said that after the traditional press conference Henderson will then join a 30-minute web chat scheduled for 4:00 pm (2000 GMT), followed by another 30-minute chat on the micro-blogging site Twitter, both open to the media and general public.
Once the world's largest corporation, General Motors sold more vehicles than any other automaker from 1931 through 2007, after which it lost the crown to Japan's Toyota.
The "new GM" will be a leaner, smaller company after having shed tens of thousands of workers, eliminated or sold storied brands, shuttered scores of factories and rewritten its labor contracts to slash costs.
It will also be unencumbered by the bulk of the massive debt load it racked up during four straight years of bleeding balance sheets.
GM entered bankruptcy protection on June 1 with liabilities of US$172.8 billion and is set to emerge with US$48.4 billion in debt.
But while GM's operating costs will be significantly lower, it could be a while before they are able to sell enough vehicles to make a profit, cautioned Rebecca Lindland, an analyst with IHS Global Insight.
"Their biggest problem is perception, and that's the hardest to fix," Lindland said in a telephone interview.
While GM's product offerings are strong, they have had trouble getting consumers to take them out for a test drive due to years of quality problems and bad press.
Meanwhile, overall auto sales remain very weak after collapsing last fall amid a credit crunch and financial market meltdown.
"They need to get new buyers excited about their products," Lindland said.
As with Chrysler, GM's old corporate entity will be liquidated under supervision of the bankruptcy court, but the new GM will not be burdened by the lengthy process.
The US government - which has provided some US$50 billion in financing - will receive a 60.8 per cent stake in the new company.
Canada, which provided US$9.1 billion in loans, will have an 11.7 per cent stake and a United Auto Workers union retiree healthcare trust fund will hold 17.5 per cent.
The "old GM" will retain a 10 per cent stake in order to allow creditors to recover some of their losses.
President Barack Obama, whose auto taskforce spearheaded the GM restructuring plan, has said his administration has no intention of nationalising the automaker over the long term and will not be participating in its day-to-day operations.
GM was able to proceed swiftly because it spent months preparing for the bankruptcy process as well as reaching agreements with its main union and most of its creditors.
A senior member of the taskforce testified last week that the government could begin to sell its stake as early as 2010, once the new company is ready to launch a public stock offering.
GM continues to work to sell its "non-core" brands and other assets, including its European arm, Opel.
It recently signed tentative deals to sell its beleaguered Saab unit to Swedish luxury sports car firm Koenigsegg, the hulking Hummer brand to a Chinese consortium and its Saturn unit to a US dealership chain.
The Pontiac brand, like Oldsmobile before it, will be slowly wound down in the coming months.
- AFP/yb
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