"Back in December, in an economy far, far away, then-CEO Rick Wagoner tossed out the scary cost to taxpayers of $100 billion if General Motors wasn't saved by the government.
Well, GM was saved in December and again in March, and as early as today the feds will rescue it a third time in a prepackaged bankruptcy that is already costing at least $50 billion,
and that's for starters. Welcome to Obama Motors, and what is likely to be a long, expensive and unhappy exercise in political car making.
Taxpayers have so far put up nearly $20 billion, which was supposed to be a loan at market rates but under Treasury's forced restructuring will mostly be converted into equity in the new GM.
The feds are also putting up $30.1 billion in "debtor in possession" financing and will effectively nationalize the once-mighty auto maker by taking roughly 60% ownership.
(That's not counting $12.5 billion to save GMAC, the company's financing arm.)
The Canadian government will go along for the ride for 12% of the new GM, the UAW will get about 17.5%,
and the hapless bond holders have to settle for 10%.Web Link
One of the brokerage houses said Friday that the expected trading range for GM common was $0.01.
That reflects the $50Bn in our money and the concessions by the UAW and all of the physical assets and goodwill.
Bondholders took 10% of next to nothing over first cut at nothing. But thats ok, they have Obama’s gratitude.