GM announces new cost cuts, axes Pontiac for survivalApril 27th, 2009 - 11:01 pm ICT by IANS
Washington, April 27 (DPA) General Motors Corp. announced another round of drastic cost-cutting measures Monday in its latest bid for survival, including abandoning its Pontiac brand and offering bondholders, employees and the government a greater stake in the ailing automaker to cut its massive debt.
Facing a June-1 government deadline to prove its viability or face bankruptcy, GM said it would axe 23,000 jobs by 2011 - 7,000 more than previously planned - as well as close factories and quicken the pace of cuts to its vast dealership network.
Pontiac will be phased out by the end of 2010, leaving the automaker with four core brands. The sale or close of Saab, Saturn and Hummer, all of which had already been marked for deletion, will be moved up to the end of 2009.
In a bid to cut $44 billion in debt, GM also plans to offer creditors an up-to-10-percent company stake. Up to half the government’s emergency loans as well as some employee benefits would also be converted into shares.
President Barack Obama’s government, which has already loaned GM $15.4 billion, has given the firm a strict deadline of June 1 to put its restructuring moves in place or lose the loans.
Should bondholders not accept the debt exchange, the automaker would be forced to declare bankruptcy.
“We are taking tough but necessary actions that are critical to GM’s long-term viability,” said Fritz Henderson, GM’s chief executive. “Our responsibility is clear - to secure GM’s future - and we intend to succeed.”
Meanwhile, Chrysler LLC., the smallest and most endangered of the “Big Three” US automakers, announced a deal with union workers that could help it meet its own Thursday deadline to prove itself viable or face bankruptcy.
Sunday’s tentative contract with the United Auto Workers must still be ratified by union members. Canadian union workers voted Sunday to accept an earlier deal with similar concessions on wages and benefits.
Chrysler is also still seeking billions of dollars in concessions from creditors before Thursday’s deadline, which was imposed by Obama in exchange for interim financing to keep the company afloat earlier this year.
The union deal is expected to help Chrysler in negotiations to form a partnership with Italian carmaker Fiat, which the Obama administration has advocated.
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