New York, New York – General Motors has moved a step closer to launching as an independent new company by receiving approval for the sale of substantially all of its assets.
Judge Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York approved the sale of the assets to NGMCO Inc., an entity funded by the U.S. Department of the Treasury. With the closing of the sale transaction, NGMCO will change its name to General Motors Company and continue to operate under GM’s historic corporate and sub-brands. The current General Motors Corporation will concurrently change its name to Motors Liquidation Company, and retained assets will be wound down or sold.
The new company will acquire GM’s strongest operations and will have a competitive operating cost structure, partly as a result of recent agreements with the auto workers’ unions in Canada and the U.S.
The company said that the new GM will have lower leverage and a stronger balance sheet. Combined with a lower break-even point, this will allow it to reduce its risk, operate profitably at much lower volume levels, and to reinvest in advanced technology and product development. GM’s subsidiaries outside of the U.S. will be acquired by the new company and are expected to continue to operate without interruption.
The new GM will be headquartered in Detroit and will be headed by Fritz Henderson as president and CEO, and Edward E. Whitacre Jr. as chairman of the board of directors.
The U.S. Department of the Treasury will hold 60.8 per cent of the new GM’s common stock, while the United Auto Workers (UAW) Retiree Medical Benefits Trust will hold 17.5 per cent, the Canadian and Ontario governments will hold 11.7 per cent, and the old GM will hold 10 per cent. Additionally, the old GM and the UAW trust will hold warrants that are exercisable for 15 and 2.5 per cent respectively in the new GM. Both the benefits trust and the Canadian government may nominate one member each to serve on the board of the new GM.
The court’s order includes a 4-day stay before closing of the sale can occur, but GM expects the sale to close in the near future. The new GM’s business is expected to be immediately operational and fully competitive, and current GM employees will be offered positions by the new company.