Interest Ratio Coverage (from WSJ)

What Is the Interest Coverage Ratio?

It measures a company’s ability to make its debt payments. Why it matters

The ratio can be calculated by dividing operating income—typically defined as earnings before interest and taxes, or EBIT—by its interest expense. (There are variations, but this is the simplest.)

“If your coverage ratio is 1, then you have no cushion,” says Dan Gode, accounting professor at the New York University Stern School of Business. Simply: When a company’s operating earnings are equal to its borrowing costs (giving it a coverage ratio of 1.0), there is no margin for error. If the business meets a rough patch and earnings drop, then the company might not be able to pay the interest on its loans. “If the ratio is north of 3 or 4, then you have some cushion,” Prof. Gode adds.

Speculation over the Federal Reserve’s interest-rate intentions comes into play. Higher interest rates for corporate borrowing will push coverage ratios down unless profits increase. For some companies, that won’t matter much; for others, it will make an already heavy debt burden harder to bear.

“Overall corporate debt might not be high, but that masks great variation” among firms, Prof. Gode says. He points to Apple Inc. as a cash-rich company with relatively little debt. “And then there are plenty that have huge levels of debt,” including some energy companies and hospitals.

Mr. Constable is a writer in New York. He can be reached at reports@wsj.com.

Falling Credit Quality of US Firms (WSJ)

Mind The Bond Market Fractures — Credit Downgrades Highest Since 2009

by Wall Street Journal • October 12, 2015

 

By MIKE CHERNEY at The Wall Street Journal

Falling profits and increased borrowing at U.S. companies are rattling debt markets, a sign the six-year-long economic recovery could be under threat.

Credit-rating firms are downgrading more U.S. companies than at any other time since the financial crisis, and measures of debt relative to cash flow are rising. Analysts expect profits at large companies to decline for a second straight quarter for the first time since 2009.

The market for riskier debt has become snarled, raising fears that companies could have trouble repaying their obligations following several years of record debt issuance, low corporate defaults and persistently low interest rates. Reflecting those concerns, investors are now demanding more yield to own corporate bonds relative to benchmark U.S. Treasury securities.

The softening U.S. corporate fundamentals have been largely overlooked as investors focused on sharp declines in the shares, bonds and currencies of many emerging-markets nations. Many analysts say the health of China remains the largest source of uncertainty in the global economy.

But rising downgrades and an increase in U.S. corporate defaults indicate “some cracks on the surface” of the domestic-growth outlook, said Jody Lurie, corporate credit analyst at financial-services firm Janney Montgomery Scott LLC. Many investors closely monitor debt-market trends as an indicator of U.S. economic health.

Bond prices for some U.S. companies have suffered. A 2024 McDonald’s Corp. bond dropped from about 104 cents on the dollar in April to about 99 cents in June after an S&P downgrade in May, according to MarketAxess data.

Bond prices for some U.S. companies have suffered. A 2024 McDonald’s Corp. bond dropped from about 104 cents on the dollar in April to about 99 cents in June after an S&P downgrade in May, according to MarketAxess data. PHOTO: MIRA OBERMAN/AGENCE FRANCE-PRESSE/GETTY IMAGES

In August and September, Moody’s Investors Service issued 108 credit-rating downgrades for U.S. nonfinancial companies, compared with just 40 upgrades. That’s the most downgrades in a two-month period since May and June 2009, the tail end of the last U.S. recession.

Standard & Poor’s Ratings Services downgraded U.S. companies 297 times in the first nine months of the year, the most downgrades since 2009, compared with just 172 upgrades. Meanwhile, the trailing 12-month default rate on lower-rated U.S. corporate bonds was 2.5% in September, up from 1.4% in July of last year, according to S&P.

About a third of the downgrades targeted oil and gas companies or firms in other commodity-linked industries, following a plunge in oil prices in the second half of 2014, said Diane Vazza, head of global fixed-income research at S&P.

Corporate finances are on the decline in other sectors, too. Wireless provider Sprint Corp., hotel and casino operator Wynn Resorts Ltd., insurance company Genworth Financial Inc. and pet-supplies company PetSmart Inc. were among the companies downgraded by S&P this year, highlighting the breadth of industries affected.

Those companies are in the junk category, meaning they are rated double-B-plus or below, but even higher-rated companies like McDonald’s Corp. and Mattel Inc. have been downgraded this year.

Bond prices have suffered. A Sprint bond maturing in 2025 fell from about 96 cents on the dollar to about 77 cents in September after Moody’s downgraded the company. A 2024 McDonald’s bond dropped from about 104 cents in April to about 99 cents in June after an S&P downgrade in May, according to MarketAxess data.

“We’re seeing more widespread weakness across more industry sectors in the U.S.,” Ms. Vazza said. “It’s become broader than just the commodity story.”

U.S. companies have increased borrowing to levels exceeding those just before the financial crisis, as firms pursue big acquisitions and seek to boost stock prices by buying back shares. According to one metric, the ratio of debt to earnings before interest, taxes, depreciation and amortization for companies that carry investment-grade ratings, meaning triple-B-minus or above, was 2.29 times in the second quarter. That’s higher than the 1.91 times in June 2007, just before the crisis, according to figures from Morgan Stanley.

“The metrics that you measure health and credit by have peaked a while ago,” said Sivan Mahadevan, head of credit strategy at Morgan Stanley. “They are beginning to deteriorate.”

Many investors and analysts say the concerns are overdone. They note that the U.S. economy is still expanding and that many large firms continue to raise money at historically low rates. They say the U.S. unemployment rate, which held at 5.1% in September, is the lowest since 2008, despite unease over slowing economic growth overseas.

While “there are some areas of weakness,” Ms. Lurie said, “there are many other points to show positive economic growth.”

Corporate finance chiefs have been willing to absorb downgrades because a stellar rating has become less important, with little price difference between some bonds with ratings a few notches apart. And until recently, companies had little trouble selling debt regardless of their rating.

But lately some companies, including the U.S. arm of Spanish bank Banco Santander SA, have had to pull bond deals and others, like chemical producer Olin Corp., had to pay higher interest rates than initially expected. Bankers lowered the price and increased the interest rate recently on a loan being sold to investors for insurance brokerage Integro Ltd., according to S&P Capital IQ LCD.

Another cause for concern: the earnings outlook is starting to dim, as slower growth in China and low commodity prices begin to hit firms’ revenue. In the third quarter, earnings for S&P 500 companies were expected to decline 5.1% over the same quarter last year, according to data as of Sept. 30 from FactSet. That follows an earnings decline of 0.7% in the second quarter compared with the year ago period.

Big U.S. companies with global footprints, like Caterpillar Inc., Monsanto Co. and Hewlett-Packard Co., have all announced layoffs in recent weeks. Analysts and investors say a strong U.S. dollar compared with currencies in other countries will hurt some U.S. companies’ revenues in the coming months.

Worries about companies’ financial health have pushed the difference in yield—called the spread—between corporate bonds and ultrasafe U.S. Treasurys to its highest level in more than three years, according to Barclays data. A bigger spread means investors want more interest relative to Treasurys to compensate them for the added risk of buying corporate bonds.

The spread for investment-grade firms recently hit 1.71 percentage points, up from 0.97 percentage point in July 2014, a move that analysts warn has foreshadowed broader economic troubles in the past.

“We are less dependent on global growth than many other developed countries, but we are not immune to the weakened economic fundamentals outside the United States,” said Gary Cloud, a portfolio manager who helps oversee the $463 million Hennessy Equity and Income Fund.

Source: Cracks Emerge in Bond Market – WSJ

What do GM bondholders get (Detroit Free Press, Bloomberg)

Bondholders of old GM to get shares in new GM shortly

BY CHRISSIE THOMPSON

DETROIT FREE PRESS BUSINESS WRITER

Apr 6, 2011|

General Motors' pre-bankruptcy
bondholders, who have waited more than
four months to share in the automaker's
return to the stock market, will receive
shares in the new GM on or around April
21, according to a bank representing
them.

After GM exited Chapter 11 in July 2009 as
a new company, its cast-off assets
remained in bankruptcy, waiting to be sold.
Bankruptcy Court Judge Robert Gerber
signed a plan last week that Motors
Liquidation -- the name for the unwanted
assets -- will use to liquidate this year.

As part of that plan, bondholders in the old
company will trade their bonds for stock in
the new company and warrants to buy
more shares. That stock and warrants
should arrive in bondholders' brokerage
accounts "on or about April 21," according
to a statement on the Web site of
Wilmington Trust, a bank representing
bondholders.

The bonds will be put in a pool with about
$36.4-billion worth of unsecured claims,
CRT Capital analyst Kirk Ludtke said in a
research note last week. About 10% of
GM's 1.5 billion common shares -- which
closed at $32.87 Tuesday afternoon -- will
be issued to bondholders proportionately
to the value of their bonds.

Those investors will also receive warrants
to buy another 15% of GM's stock by either
2016 or 2019. Bondholders will purchase
that extra stock by paying either $10 or
$18.33 per share.

The initial payment of stock and warrants
will be about 70% of what each bondholder
will eventually receive. The rest will be paid
out as the last claims against old GM are
paid, with most of the remainder to arrive
within three or four months. The rest could
trickle in over a year or longer.

Bondholders with questions may contact
Wilmington Trust at 866-521-0079 or
mlcguctrust@wilmingtontrust.com.

Contact Chrissie Thompson: 313-222-
8784 or cthompson@freepress.com

--------------------------------------------------

Old GM Bondholders Getting Shares in New GM May Depress Price
April 07, 2011, 12:04 AM EDT
By David Welch

April 7 (Bloomberg) -- Investors holding bonds in the old General Motors Corp. will receive stock and warrants for shares in the new General Motors Co. on April 21, an action that analysts said may depress the stock price.

Old GM, now known as Motors Liquidation Co., will give bondholders 150 million shares in GM and warrants to buy 272.8 million more shares. A trust holding the shares will distribute them directly to bondholders’ brokerage accounts on or after April 21, according to a memo distributed Wilmington Trust Inc., a money-management firm hired by the creditors’ committee.

Some of the bondholders are retail investors who may sell the shares and briefly sink GM’s stock price, said David Whiston, an analyst with Chicago-based Morningstar Inc. Investors have probably priced in the dilution, so it won’t change GM’s long-term value, he said. He has not changed his $48 a share valuation based on the release of shares to bondholders.

“I would think that there will be more selling than holding,” Whiston said. “Any sell-off in GM is a buying opportunity. Long term, I think the company is positioned very well.”

Bondholders were promised stock and warrants in the new GM to make up for some of their loss during the predecessor company’s government-backed bankruptcy. The warrants given to bondholders for new GM stock are already in the money, according to a report by Kirk Ludtke, senior vice president of CRT Capital Group, a money management firm in Stamford, Connecticut.

Warrant Release

When U.S. Bankruptcy Court releases the warrants and stock through a trust, bondholders will collectively get 136.4 million warrants for one share each at $10 a share and an equal amount at $18.33 a share, said Wilmington Trust, which is based in Wilmington, Delaware.

Owners of old GM bonds must notify Wilmington Trust by April 15 to get stock and warrants on April 21. If they notify Wilmington later, the bondholders will get their shares and warrants at a later date.

Currently, Motors Liquidation has about $30 billion in claims allowed by bankruptcy court, of which about $29 billion are from the bondholders, said a person familiar with the matter.

There may be as much as $8.8 billion in additional claims that could be allowed by the court, Ludtke said in the report.

If the approved unsecured claims exceed $35 billion, GM would have to issue up to 30 million shares, Jim Cain, a company spokesman, said in an interview. GM doesn’t expect claims to reach that amount, the company said in a regulatory filing.

The bonds issued by General Motors Corp. should recover about 30 cents on the dollar when the shares are distributed later this month, Ludtke said in a telephone interview. He expects GM’s share price to rise to $40, which implies a recovery rate of about 40 cents on the dollar, Ludtke said.

GM shares were unchanged at $32.87 yesterday in New York Stock Exchange Composite trading, down from a high of $38.98 on Jan. 7. The shares were priced at $33 for the initial public offering in November.

--Editors: Jamie Butters, Kevin Orland.

To contact the reporter on this story: David Welch in Southfield, Michigan, at dwelch12@bloomberg.net.

To contact the editor responsible for this story: Kevin Orland at korland@bloomberg.net.

States in Trouble (Daily Beast)

50 States in Debt

#1, Rhode Island
Debt 2009: $9.2 billion
Projected 2012 Budget Shortfall: $290 million
GDP 2009: $47.8 billion
Debt/GDP Ratio: 19.19%
Unfunded Pension Liabilities: $4.4 billion (39%)
Unfunded Health Care & Other Liabilities: $788 million (100%)

On the chopping block: Rhode Island’s judges and court workers are trudging along despite a lack of funds cutting paid work days per week and 53 positions that remain unfilled. “This is not a time for expensive initiatives and hefty new capital projects. It is a time to do the very best with the limited resources we have,” said Chief Justice Paul A. Suttell. The states court system has responded to budget shortfalls in part by disposing of cases on backlog.

#4, Illinois


Debt 2009: $57.0 billion
Projected 2012 Budget Shortfall: $15.0 billion
GDP 2009: $630.4 billion
Debt/GDP Ratio: 9.04%
Unfunded Pension Liabilities: $54.4 billion (46%)
Unfunded Health Care & Other Liabilities: $39.9 billion (100%)

On the chopping block: The state's mental-health services will lose $91 million in funding during the next fiscal year as a result of Illinois' extreme budget gap. Illinois Human Services chief Michelle Saddler has expressed her worry over the effect of the large cut, saying, "I'm concerned that we will see a real public-health crisis and real public-safety crisis with these cuts."




#6, New Jersey


Debt 2009: $56.9 billion
Projected 2012 Budget Shortfall: $10.5 billion
GDP 2009: $483 billion
Debt/GDP Ratio: 11.78%
Unfunded Pension Liabilities: $34.4 billion (27%)
Unfunded Health Care & Other Liabilities: $69 billion (100%)

On the chopping block: One of the biggest losers will likely be school districts, which are slated to have their funding decreased by $820 million. With $268 million coming in federal aid, 4,000 teachers may be able to keep their jobs. “Public opinion may well shift a bit when school is back in session, once parents start seeing the effects,” said Ben Dworkin of the Rebovich Institute for New Jersey Politics.

#23, New York


Debt 2009: $122.7 billion
Projected 2012 Budget Shortfall: $9.0 billion
GDP 2009: $1.1 trillion
Debt/GDP Ratio: 11.22%
Unfunded Pension Liabilities: $0
Unfunded Health Care & Other Liabilities: $56.3 billion (100%)

On the chopping block: With the threat of a shut down in Albany and the state’s finances verging on desperate, the state legislature finally passed a budget in early August. The state's public schools may also be nearing desperation, as the cuts proposed by Governor David Paterson include chopping $1.1 billion for state aid to schools.




#28, Nevada


Debt 2009: $4.4 billion
Projected 2012 Budget Shortfall: $1.5 billion
GDP 2009: $126.5 billion
Debt/GDP Ratio: 3.51%
Unfunded Pension Liabilities: $7.3 billion (24%)
Unfunded Health Care & Other Liabilities: $2.2 billion (100%)

On the chopping block: The Governor Guinn Millenium Scholarship program, which provides up to $10,000 toward college tuition for high school seniors, lost $12.6 million in funding last year as Nevada legislators closed the state's budget gap for the current fiscal cycle.





#40, Virginia


Debt 2009: $24.3 billion
Projected 2012 Budget Shortfall*: $2.3 billion
GDP 2009: $408.4 billion
Debt/GDP Ratio: 5.95%
Unfunded Pension Liabilities: $10.7 billion (16%)
Unfunded Health Care & Other Liabilities: $2.6 billion (66%)

On the chopping block: Health Care. New federal money will soften the blow of the loss of health coverage for low income Virginians, but the $293 million the state received is still $100 million less than lawmakers were banking on.

*Virginia operates with a 2-year budget.



#41, Florida

Debt 2009: $38.9 billion
Projected 2012 Budget Shortfall: $3.6 billion
GDP 2009: $737.0 billion
Debt/GDP Ratio: 5.28%
Unfunded Pension Liabilities: -$1.8 billion (-1%)
Unfunded Health Care & Other Liabilities: $3.1 billion (100%)

On the chopping block: The judicial system. Staff have been relieved, basic maintenance has been cut, programs for drug offenders have been reduced, and one Tampa courthouse is infested with vermin. All that hasn’t stopped the 1st District Court of Appeal in Tallahassee which is building a $48 million courthouse complete with 60-inch LCD flat screens for each judge.





#48, Texas


Debt 2009: $30.4 billion
Projected 2012 Budget Shortfall: $13.4 billion
GDP 2009: $1.1 trillion
Debt/GDP Ratio: 2.66%
Unfunded Pension Liabilities: $13.8 billion (9%)
Unfunded Health Care & Other Liabilities: $28.6 billion (98%)

On the chopping block: Texas has one of the better debt-to-gdp ratios at the moment, but its legislature is still having trouble coming up with the cash for the next two years of operating expenses. That could mean unpaid furloughs, salary freezes and four-day work weeks for state employees. "There's not any fat left," said Andy Homer of the Texas Public Employees Association. "This is cutting to the bone."



#50, Nebraska


Debt 2009: $2.5 billion
Projected 2012 Budget Shortfall: $314 million
GDP 2009: $86.4 billion
Debt/GDP Ratio: 2.91%
Unfunded Pension Liabilities: $755 million (8%)
Unfunded Health Care & Other Liabilities: n/a

On the chopping block: Students are going to have to pony up more money for tuition at all University of Nebraska campuses, according to a budget proposal released by president J.B. Milliken. With less money coming from the state, "I'm concerned about the investment in education," Milliken said.

What the GM bondholders get from the IPO (Detroit Free Press)

Posted: Nov. 15, 2010
In GM IPO, stakeholders could walk away with billions as stock hits the market this week

Some will see billions as stock is released to public this week
By CHRISSIE THOMPSON
FREE PRESS BUSINESS WRITER

This week, General Motors' stakeholders will see some cash. Finally.
If all goes as planned, GM will price its initial public stock offering on Wednesday, and the stock will hit the market on Thursday morning with new owners.

As trading begins, owners such as the U.S. Treasury will walk away with billions of dollars in exchange for releasing their GM stock to the public.

But that doesn't include GM bondholders -- many of whom are Detroiters who supported the home team years ago through their investment portfolio.

During GM's bankruptcy last year, the bondholders were given a 10% stake in the new GM. But they won't actually receive the shares until the liquidation of the cast-off portion of the old GM that is still in bankruptcy. That's expected to take three to six months, according to an insider from a firm that's a major bondholder.

Until then, GM's bonds will continue to trade. And starting this week, so will the stock -- with everyday Joes like Kris Trexler eager to get a piece from the stock's first public owners.

Trexler, a Los Angeles film and video editor, said he cried when he turned in the EV1 electric car that GM canceled a decade ago. He's now one of the consumer advisers testing a Chevrolet Volt for three months -- and he already has a Volt on order for when the test ends.

"After driving this car ... I can't think of any reason I wouldn't buy some stock," Trexler said. "This company is back, and they've proved it to me."

Old GM bonds guarantee shares of new GM stock

"I've been holding them for years. What's another couple of months?"

That's the strategy Northville's Frank Drew says he's using for his General Motors bonds. The bonds, with a face value of about $150,000, are now trading at about a third of their original value. But once the part of the old GM still in bankruptcy is liquidated, Drew will get GM stock. His bonds will be put in a pool with about $37 billion worth of bonds and other unsecured claims, and 10% of GM's 1.5billion common shares will be issued to bondholders proportionately to the value of their bonds.That stock will be Drew's to do with as he wishes -- just as it will be for the buyers of GM's stock when it hits the market Thursday, 16 months after the company exited Chapter 11 bankruptcy.

GM is planning to sell up to 419.75 million common shares and 69 million Series B preferred shares to hedge funds, money managers and long-term investment firms. Those firms will then trade the stock on the New York and Toronto stock exchanges.

The automaker set a target range for the common shares at $26 to $29 each, but GM is expected to raise that range early this week by no more than a few dollars, according to two sources familiar with the situation. As executives finish their road show presentations to investors in North America and Europe, they're gauging the interest of the all-important long-term investment firms. GM needs those firms to hold stock for months, or even years, to keep it stable.

By all accounts, demand for GM stock is strong, likely enough for every possible share to sell. And the recent market improvements only help. The Dow Jones Industrial Average has gained about 500 points in the last month, and more than 1,000 in the last two months, closing Friday at 11,283.

Probable buyers include GM's Chinese automaker partner SAIC and investment funds from the Middle East.

That could create controversy for the IPO's largest seller, the U.S. Treasury, which is planning to use the sale to lower its stake in GM from 60.8% to slightly more than 40%. The treasury has said that some foreign investors would be allowed, but consumer advocate and former presidential candidate Ralph Nader cosigned a letter last week to President Barack Obama, urging him to suspend the IPO, partially because of the need to keep investment in the U.S.

Nader was also concerned that the government plans to sell part of its stake at a loss. The government needs to average $43.67 per share to break even on its $50-billion investment in GM, above the likely range. The treasury is hoping GM's stock will grow in value over the coming months and years so it can make more money when it sells the rest of its shares.

An increase in stock price is likely, said a person from a firm that owns a large number of GM bonds. The firm expects GM's stock to quickly reach the mid-$30 range the bond trading currently implies. And by 2013 or 2014, the person said, the firm expects the stock to hit $60 to $70 each, as long as GM fulfills executives' predictions that the company will make $11 billion to $13 billion annually before interest and taxes in an average sales climate.

GM bondholders will also receive warrants to buy more stock by either 2016 or 2019. Bondholders will be able to receive that extra stock by paying either $10 or $18.33 per share, which will count as revenue for GM. The warrants will take bondholders' total share in GM to 23.85%.Contact Chrissie Thompson: 313-222-8784 or cthompson@freepress.com

When is the GM IPO? After the Election (WSJ)

Official White House Briefing: "Fact Sheet on Obama Administration Restructuring of General Motors"

Treasury Provides Further Guidance on GM IPO

AUTOS SEPTEMBER 21, 2010

China's SAIC Expresses Interest in Buying GM Stake


By SHARON TERLEP
DETROIT—Interest by China's biggest auto maker in possibly buying a stake in General Motors Co. this fall raises the dicey issue for the U.S. government over foreign investment in the Detroit company.

SAIC Motor Corp., which has built cars with GM in China since the 1990s, hasn't decided whether to participate in GM's initial public offering but has expressed an interest in doing so, people familiar with the matter said.

GM declined to comment about SAIC. The Chinese auto maker said only that it is closely watching the GM offering. SAIC's interest was first reported by Reuters news service.

The issue of foreign investors buying GM shares in the company's IPO is a thorny one for the U.S. government, which is eager to unload its 61% stake in the auto maker.

The Treasury is likely to seek out large institutional investors to buy blocks of GM stock at a set price. Such "cornerstone" investors typically commit to holding their stock as a show of confidence, which can help draw other investors. In exchange, cornerstone investors sometimes get a favorable deal on the shares. Several U.S. investors have expressed an interest in buying a stake in GM, including potential cornerstone investors, according to a person familiar with the situation.

The larger the group of cornerstone investors, the easier it would be for the Treasury to sell a big chunk of its GM stake in the IPO. GM and the banks underwriting the deal are pushing for the biggest possible investor pool to increase the size of the offering. The IPO will likely involve shares held by the Treasury, a union-managed retiree trust fund and Canadian governments.

But the Treasury also is worried about the political reaction if non-U.S. investors, such as sovereign-wealth funds or a Chinese company, are allowed to acquire a significant stake in GM after U.S. taxpayers spent $50 billion to assist the company through bankruptcy reorganization.

"Critics will publicly blast the Obama administration for using taxpayer money to fund foreign ownership in an American icon," said Morningstar automotive equities analyst David Whiston. Yet restricting foreigners from buying stock in the IPO would be impractical since the shares would be available on the public market, he said.

Indeed, the Treasury, in an effort to maximize the share price and establish a solid shareholder base, said last week that all investors will have access to GM shares. The statement also said, however, that no single investor or group of investors would receive "a disproportionate share or unusual treatment."

GM plans to begin pitching the IPO to investors immediately after the Nov. 2 midterm elections, which could keep the IPO separate from campaign politics. The goal is to conduct the offering before the end of the month. GM Chief Executive Dan Akerson said last week that it will likely take years for the U.S. government to unload its entire stake.

Mr. Akerson, who took over as CEO Sept. 1, has been more pragmatic about the IPO than was his predecessor Edward E. Whitacre Jr., who pushed the Treasury to unload as many shares as possible as quickly as possible. In contrast, Mr. Akerson last week acknowledged the importance of Treasury getting the best possible share price, even if means the government continues to hold some shares for some time.

China's auto market, the world's biggest, is a key source of strength for GM.

The auto maker's sales in China rose 19% in August from a year earlier while the U.S. and European markets struggled. The auto maker's partnership with SAIC has been central to GM's success in China and is expected to continue to play a major role.

Such joint ventures also are an important platform to reaching other fast-growing, emerging markets. GM and SAIC are teaming to expand in India, for example.

Write to Sharon Terlep at sharon.terlep@wsj.com

The GM IPO (Businessweek, Reuters, Barrons)

Barron's Cover | SATURDAY, AUGUST 21, 2010
Who's Driving?
By ANDREW BARY

Speculation on the new GM: IPO Price, What old GM Bondholders Might Get

"....The way for investors to play the new General Motors is through the debt of the old GM. Valuing that $27 billion (face amount) of debt isn't simple because the bonds are entitled to 50 million GM shares and two issues of warrants to buy more. The warrants, each involving 45.5 million shares, have strike prices of $30 and $55 and aren't easy to value. And there's an additional wrinkle: Bondholders aren't the only creditors entitled to the stock and warrants. There may be at least $37 billion of total claims allowed by the bankruptcy court, GM said in its IPO prospectus. This means that the stock and warrants will be apportioned to a larger group of creditors than just bondholders...."



GM plans to file for IPO during week of August 16: sources
Fri, Jul 23 2010
By Clare Baldwin and Soyoung Kim

NEW YORK/DETROIT (Reuters) - General Motors Co plans to file its registration for an initial public offering during the week of August 16, just after the expected date for its second quarter results, according to two people with direct knowledge of the preparations.

A GM filing with the U.S. Securities and Exchange Commission would be the first step toward an IPO to reduce the U.S. government's ownership in the automaker after a $50 billion bailout in 2009.
By filing with the SEC in August, GM is aiming to complete its IPO before the November U.S. elections, according to the sources, who asked not to be named because the closed-door preparations remain confidential.

GM also remains in talks with Bank of America Corp , JPMorgan Chase & Co , and Wells Fargo & Co for dealer and consumer financing for more credit-worthy borrowers, one of the sources said.

One concern for potential investors has been whether GM dealers and potential car buyers have the same kind of access to financing as competitors with in-house financing operations like Ford Motor Co .

General Motors on Thursday said it would buy auto finance company AmeriCredit Corp for $3.5 billion in cash to form what it called the "core" of a captive finance operation. The move marks a reversal of the position GM took when it sold control of its former in-house financing arm GMAC in 2006.

Any additional financing partnership agreement GM reaches would be complementary to the AmeriCredit transaction, one of the sources said. Many GM dealers have complained that lack of consumer financing has cost them sales.

An IPO for the U.S. automaker, which was restructured in bankruptcy last year, would be the biggest U.S. stock offering since Visa Inc's $19.7 billion March 2008 IPO and one of the biggest IPOs of all time.

GM's second-quarter earnings report is expected to show the automaker generated cash for a second consecutive earnings period, according to one of the sources.

GM Chief Financial Officer Chris Liddell told CNBC on Thursday that the automaker would report results in about three weeks.

GM spokeswoman Renee Rashid-Merem told Reuters on Thursday the automaker would report second quarter results in mid-August.

"Beyond that, we aren't commenting on matters relating to an IPO. We will launch an IPO when the conditions are right and the company is ready," she said.

U.S. officials have said repeatedly that GM's board of directors have a free hand to run the company to try to improve the return for taxpayers.

The automaker posted its first quarterly profit since 2007 in the first quarter. In the June-ended quarter, industry-wide U.S. auto sales were above 11 million vehicles on an annualized and adjusted basis.

But GM's lower cost structure coming out of bankruptcy has allowed the automaker to break even with industry-wide U.S. sales as low as about 10.5 million vehicles, the sources said.

UAW, CANADA SALES PROPORTIONAL

GM's biggest shareholder is the U.S. Treasury, which owns nearly 61 percent of the automaker. The Treasury is expected to sell between 20 and 24 percent of its stake, sources said earlier this month.

The United Auto Workers healthcare trust, which owns 17.5 percent of GM, and the governments of Canada and Ontario, which own 11.7 percent, are expected to sell the same share of their holdings as the U.S. government, one of the sources said on Thursday.

GM, which is not expected to pay dividends on its newly-issued common stock, also plans to sell $3 billion worth of mandatory convertible securities, a source said earlier this month.

The U.S. automaker also is in the process of finalizing a $5 billion revolving credit line, several sources have said.

(Reporting by Clare Baldwin in New York and Soyoung Kim in Detroit, additional reporting by Kevin Krolicki in Detroit; editing by Carol Bishopric





Politics & Policy July 15, 2010, 5:00PM EST
GM's IPO May Require Hefty Incentives
The sales pitch will need hope, contrition, and smooth talking

By Roben Farzad, David Welch and Jeff Green

The initial public offering of recently bankrupt and nationalized General Motors looks to be one of the trickiest deals in memory.

True, the still-enormous carmaker has shed billions in liabilities and legacy costs in its "quick-rinse" 39-day bankruptcy. After a federal rescue, GM is again profitable, and its vehicles are selling briskly in the U.S. and China. Yes, the Treasury Dept., which extended close to $50 billion of aid to the behemoth last year, is a motivated seller, eager to prove the bailout a success in an election year in which many voters say bailouts wasted their money. "The initial public offering will be a significant step in carrying out Treasury's previously announced intention of disposing of TARP investments as soon as practicable," states a Treasury memo on the deal, not yet scheduled but widely expected before the November elections.

The Wall Street underwriters, likely to be Morgan Stanley (MS) and JPMorgan Chase (JPM), are so keen to participate that they are accepting a 75 percent discount on their fees, says one person briefed on the matter. Various estimates peg the flotation, including about 20 percent of the government's 61 percent stake, at $12 billion, which would make it the second-largest in a decade, after Visa's (V) $19.7 billion deal in 2008. And do not underestimate GM Chief Executive Ed Whitacre's resolve. "The new management team desperately wants to feel like a legitimate company again," says Steve Dyer of Craig-Hallum Capital Group, a Minneapolis-based trading and research shop. "That can only happen if they get rid of the perception that they're still reliant on the government."

All great, save for one thing: It's not clear that investors are pining to buy GM 2.0. This could be an IPO unlike any other, and not only because Uncle Sam is hawking the shares. The main selling point will not be a quick return on investment. Instead, it will be that GM's limited record of success—the company just reported its first quarterly profit since 2007—is only the beginning. Throw in contrition and appeals to hope and patriotism, and GM just might have a successful offering.

Job No. 1 is restoring "Government Motors" to a staple investment for institutional shareholders. That means convincing investors it can consistently make a profit in a leaner car-selling market. There's no getting around the reality, though, that GM has a ways to go before it wins over the car-buying public. In an April Consumer Reports study of reliability among 15 automakers, GM scored second to last. GM has shed the Hummer, Pontiac, Saab, and Saturn brands and now consists of Buick, Cadillac, Chevrolet, and GMC.

Then there's the let-bygones-be-bygones part of the IPO sales pitch: GM must persuade investors burned by the government takeover and unconventional bankruptcy to buy its shares again. That might require mediation by the U.N. after a bankruptcy proceeding in which the United Auto Workers union received more of the newly issued stock than some bondholders—a rearranging of the stakeholder pecking order that would not have happened in a traditional court-managed filing. "GM and Treasury will pay a price for that," says Maryann Keller, a veteran auto industry analyst who advises large investors. "Three words," says William Smith of New York-based Smith Asset Management, a former holder of GM's old shares: "Smoke and mirrors." He calls the preference given to the UAW in the bankruptcy "dirty pool," something "unprecedented in a democratic country with bankruptcy rules."
Even after its restructuring, GM has a troubling pension burden. Its retirement plan is underfunded by $26.8 billion. While the company doesn't have to make a payment for three years, at some point more money will have to go into the plan.

There are other questions: The reception for GM's much anticipated all-electric Volt, which the company says it will roll out at the end of next year, is uncertain. So is GM's plan to fix its European operations, which lost $506 million in the first quarter. Another unknown is what kind of auto market GM needs to stay in the black. The sales levels of 16 million to 17 million cars a year that once prevailed? Or the present 11 million?

Keller argues that demand has been reset downward because of lagging personal income, fading consumer confidence, and the end of easy credit. Detroit, she notes, has spent the past four decades extending the typical car loan from two years to five or six, to reduce monthly payments and get more units out the door. Now, she says, "we're really at the limit of what you can do with creative auto financing." GM's lack of a dedicated finance arm could also be a problem. "GM will launch an IPO when the conditions are right and the company is ready," says spokeswoman Nina Price, declining further comment.

Perhaps the strongest case for a resurrected GM stock is that many fund managers will have no choice. What was too big to fail a year ago remains too big to ignore in current investing terms. Ford (F), which is the only other remnant of the Big Three available to investors, is the 53rd-largest component in the Standard & Poor's 500-stock index, according to Bloomberg data. GM, which is now probably worth more than Ford's $40 billion valuation, would almost certainly be restored to the S&P 500, the preferred benchmark for mutual funds. "Most fund managers need and want exposure to the space," says Craig-Hallum's Dyer.

The underwriters have a tricky assignment: Unless the stock market ultimately values the 102-year-old automaker at a truly impressive $80 billion, taxpayers will not break even. With confidence flagging in the overall economic rebound and the auto industry's wobbliness in recent months, "the risk remains high that an IPO in this environment is unlikely to generate the best returns for the taxpayers," writes Bill Visnic, a senior editor at Edmunds' AutoObserver.com. As any good dealer will admit, you need heavy incentives and smooth talking to move a rebuilt car off the lot.

The bottom line: Despite a shaky economy, the White House is eager to refloat General Motors after its government takeover and bankruptcy.

Bloomberg Businessweek Senior Writer Farzad covers Wall Street and international finance. Welch is Bloomberg Businessweek's Detroit bureau chief. Green is a reporter for Bloomberg News .

Which States are in the Worst Shape (FDIC)

FDIC State Profiles are a quarterly data sheet summation of banking and economic conditions in each state.

http://www.fdic.gov/bank/analytical/stateprofile/index.html

BP and Bankruptcy (NY Times)

June 7, 2010
Imagining the Worst in BP’s Future
By ANDREW ROSS SORKIN

It seems unthinkable, even now, that the disastrous oil spill in the Gulf of Mexico could bring down the mighty BP. But investment bankers get paid to think the unthinkable — and that is just what they are doing.

The idea that BP might one day file for bankruptcy, particularly as part of a merger that would enable it to cordon off its liabilities from the spill, is starting to percolate on Wall Street. Bankers and lawyers are already sizing up potential deals (and counting their potential fees).

Given the plunge in BP’s share price — the company has lost more than a third of its value since Deepwater Horizon blew — some bankers and analysts say BP is starting to look like takeover bait. The question is, who would buy BP, given its enormous potential liabilities?

Shell and Exxon Mobil are both said to be licking their chops. And already, flinty legal minds are dreaming up scenarios in which BP would file a prepackaged bankruptcy and separate the costs of the cleanup — and potentially billions of dollars in legal claims — into a separate corporate entity.

Tony Hayward, BP’s chief executive, has insisted that his giant will weather this storm. BP is indeed a money machine: it turned a profit of nearly $17 billion last year.
“The strength of cash-flow generation in recent quarters has provided us with a balance sheet that allows us to fully take on the responsibility for the Gulf of Mexico response,” Mr. Hayward told employees last Friday.

But that hasn’t stopped the deal crowd from blue-skying potential outcomes. Here is some of the math:

BP’s costs for the cleanup could run as high as $23 billion, according to Credit Suisse. On top of that, BP could face an additional $14 billion in claims from gulf fisherman and the tourism industry. So while conservative estimates put the bill at $15 billion, something approaching $40 billion is not out of the question. After all, little about this spill has turned out as expected.

The company has about $12 billion in cash and short-term investments, but there is already a debate about whether it should cut its dividend out of fear that it could run out of money. Of course, it could sell assets or seek loans, which in this environment is still not that easy.

But all those numbers don’t account for the greatest possible threat: a jury verdict against BP. Such a verdict might push the cost of the spill into the hundreds of billions. If that happened, even BP might buckle.

This outcome might seem far-fetched right now. But on Wall Street bankers have already coined a term for it: “the Texaco scenario.”

In 1987, Texaco was forced to file for Chapter 11 because it could not afford to pay a jury award worth $1 billion to Pennzoil. That award had been knocked down by a judge from a whopping $10.53 billion. (Pennzoil successfully sued Texaco for “jumping” its planned merger with Getty Oil, in part, by moving the case to local court near its headquarters. The jury awarded triple damages.)

Imagine the BP case playing out in a Louisiana courtroom, against the backdrop of an oil-choked local economy, high unemployment and an angry public. How high can you count?

Under the Oil Pollution Act of 1990, BP’s liability for economic devastation — above the cost of the cleanup — is capped at $75 million, a number Mr. Hayward has already said he plans to blow through. But if BP is found to have violated safety regulations, which seems likely, that cap becomes irrelevant.

That’s not to say that BP won’t fight a huge judgment against it. After the Exxon Valdez spill, Exxon fought a $5 billion fine for punitive damages for two decades. It won. The fine was cut down to $4 billion, then to $2.5 billion. The case eventually made it to the Supreme Court, which found that Exxon’s actions were “worse than negligent but less than malicious,” and vacated the fine. The judgment limited punitive damages to the compensatory damages, which were calculated as $507.5 million.

“There are so many imponderables over whether its liabilities would be capped or not,” David Buik of BGC Partners in London wrote of BP. “If BP’s share price continues to fall, it could become a takeover target.”

Given that Shell and Exxon have billions in cash on hand and market values that easily exceed BP — Exxon is twice the size — bankers say now is the time to make a deal, as long as an acquirer can find a way to separate the legal exposure. That, of course, is a big ‘if.’

There are many people — besides BP — who think even discussing the possibility of a bankruptcy or takeover is silly. But looking out a few years, that may be BP’s best, last hope.

“Even with a prepackaged bankruptcy, BP’s brand is permanently tainted,” said Robert Bryce, a senior fellow at the Manhattan Institute and author of “Power Hungry: The Myths of ‘Green’ Energy and the Real Fuels of the Future.” Yes, BP is financially sound now. It is unlikely to go bust near term, he said.

“Instead, BP will spend the coming decades circling the drain, mired in endless litigation, its reputation irreparably damaged, and its finances weakened,” Mr. Bryce said.

That, if you believe the bankers, is the optimistic outcome.


The latest news on mergers and acquisitions can be found at nytimes.com/dealbook.

Info for GM Bondholders (Wilmington Trust)

Q:What is Wilmington Trust’s role?
A:Wilmington Trust is the successor Indenture Trustee to Citibank NA under two separate Indenture
agreements with General Motors, one dated November 15, 1990 and the second dated December 7, 1995.
Q:What is an Indenture Trustee?
A: An Indenture Trustee is the party under the contract that represents the rights and responsibilities of the
bondholders.
Q:What is a successor?
A: A successor in this situation is Wilmington Trust, who succeeded Citibank NA as the original Indenture
Trustee.
Q:What is an Indenture?
A: An Indenture is a contract underlying the bond issue and is between General Motors and the Indenture
Trustee.
Q:What are the securities, including rate, maturity, and CUSIP numbers, which are affected?
A: See attached listing below. *
Q: As a holder of General Motors debt am I going to get paid?
A: As a bondholder you will be represented by Wilmington Trust Company as Indenture Trustee.
Payments made to bondholders will be determined through the bankruptcy process and communicated
to you by Wilmington Trust as Indenture Trustee.
Q: How much will I be paid?
A: As a bondholder you will be represented by Wilmington Trust Company as Indenture Trustee.
Payments made to bondholders will be determined through the bankruptcy process and amounts paid
to bondholders will be communicated to you by Wilmington Trust as Indenture Trustee.
Q: How am I going to get paid?
A:When distributions are available Wilmington Trust as Indenture Trustee and its agents will pay the
holders of record for the securities directly via wire transfer or other method of distribution.
Q: Do I need to file a proof of claim?
A: As a bondholder you will be represented by Wilmington Trust Company as Indenture Trustee. This will
include the filing of necessary documents in the courts, including proofs of claim.
Q: As a bondholder, what do I need to do now?
A: At this time there is no action required on the bondholder’s part. Lines of communication remain open
between the bondholders and the Indenture Trustee and the Indenture Trustee will communicate on a consistent
and equal basis with all bondholders.
General Motors Bondholders
Frequently Asked Questions
Q:What are the next steps?
A:Wilmington Trust Company as Indenture Trustee will work closely with the bankruptcy court, the committees
that are formed, and the company, communicating with the bondholders as necessary and appropriate.
Q: How do I stay in touch with you?
A:Wilmington Trust as Indenture Trustee is creating a distribution list and will provide communications as
appropriate.
Q: Does Wilmington Trust hold any General Motors debt directly?
A:Wilmington Trust does not directly hold any debt of General Motors and has no direct credit exposure to
General Motors.
Q:Who is the General Motors Stock Transfer Agent?
A: Computershare is the stock transfer agent and they can be reached at 800 331-9922.
**Issue Name CUSIP# Outstanding Indenture Date Closed Date
GM Corp 9.40% Debs due 7/15/2021 370442AN5 $299,795,000.00 11/15/1990 7/22/1991
GM Corp 8.80% Notes due 3/1/2021 370442AJ4 $524,795,000.00 11/15/1990 3/12/1991
GM Corp 7.40% Debs due 9/1/2025 370442AR6 $500,000,000.00 11/15/1990 9/11/1995
GM Corp Medium Term Notes AG3 37045EAG3 $15,000,000.00 11/15/1990 7/22/1991
GM Corp Medium Term Notes AS7 37045EAS7 $48,175,000.00 11/15/1990 12/21/1990
GM Corp 7.75% Disc Debs due 3/15/2036 370442AT2 $377,377,000.00 12/7/1995 3/20/1996
GM Corp 7.70% Debs due 4/15/2016 370442AU9 $500,000,000.00 12/7/1995 4/15/1996
GM Corp 8.10% Debs due 6/15/2024 370442AV7 $400,000,000.00 12/7/1995 6/10/1996
GM Corp 6 3/4 Debs due 5/1/2028 370442AZ8 $600,000,000.00 12/7/1995 4/29/1998
GM Corp 7.20% Notes due 1/15/2011 370442BB0 $1,500,000,000.00 12/7/1995 1/11/2001
GM Corp 7.25% Q Int Bnds due 4/15/2041 370442816 $575,000,000.00 12/7/1995 4/30/2001
GM Corp 7 1/4 Sr Notes due 7/15/2041 370442774 $718,750,000.00 12/7/1995 7/9/2001
GM Corp 7.375% Sr Notes due 10/1/2051 370442766 $690,000,000.00 12/7/1995 10/3/2001
GM Corp 7.25% Sr Notes due 2/15/2052 370442758 $875,000,000.00 12/7/1995 2/14/2002
GM Corp 4.50% Series A Conv Sr Debs 370442741 $1,150,000,000.00 12/7/1995 3/6/2002
GM Corp 5.25% Series B Conv Sr Debs 370442733 $2,600,000,000.00 12/7/1995 3/6/2002
GM Corp 7.375% Sr Notes due 5/15/2048 370442725 $1,115,000,000.00 12/7/1995 5/19/2003
GM Corp 7.375% Sr Notes due 5/23/2048 370442BQ7 $425,000,000.00 12/7/1995 5/23/2003
GM Corp 8.375% Sr Debs due 7/15/2033 370442BT1 $3,000,000,000.00 12/7/1995 7/3/2003
GM Corp 6.250% Series C Conv Sr Debs 370442717 $4,300,000,000.00 12/7/1995 7/2/2003
GM Corp 8.25% Sr Debs due 7/15/2023 370442BW4 $1,250,000,000.00 12/7/1995 7/3/2003
GM Corp 7.125% Sr Notes due 7/15/2013 370442BS3 $1,000,000,000.00 12/7/1995 7/3/2003
GM Corp 7.50% Sr Notes due 7/1/2044 370442121 $720,000,000.00 12/7/1995 6/30/2004
GM Corp 1.50% Series D Conv Sr Debs 370442691 $1,500,000,000.00 12/7/1995 5/31/2007

GM BANKRUPTCY DEADLINE

Claims Information

Parties with claims related questions concerning Motors Liquidation Company can email claims@motorsliquidation.com, or call (800) 414-9607.
http://www.motorsliquidation.com/ClaimsInformation.aspx

MOTORS LIQUIDATION COMPANY
BAR DATE NOTICE FAQS
The Bankruptcy Court has set November 30, 2009 at 5:00 p.m. Eastern Time as the deadline for creditors, including governmental units, to file Proofs of Claim based on
claims that arose prior to June 1, 2009. This deadline is commonly referred to as the
“Bar Date.” Proofs of claim must actually be received by the Debtors prior to the Bar
Date. If you do not file your Proof of Claim before this deadline, you will lose your
potential claim against the Debtors.
Who are the Debtors?
The Debtors are the following entities:
• Motors Liquidation Company (formerly known as General Motors Corporation)
• MLCS, LLC (formerly known as Saturn, LLC)
• MLCS Distribution Corporation (formerly known as Saturn Distribution
Corporation)
• MLC of Harlem, Inc. (formerly known as Chevrolet-Saturn of Harlem, Inc.)
People Who Do Not Need to File Proofs of Claim:
You do not need to file a Proof of Claim by the Bar Date if:
• Your claim is correctly listed in the Debtors’ Schedules of Assets and Liabilities
AND is not listed as “disputed”, “contingent”, or “unliquidated” AND you agree
with the dollar amount and listing of your claim as scheduled
• Your claim has already been paid in full
• You have already filed a Proof of Claim
• One of the other “exceptions” described in paragraph 2 of the Bar Date Notice
applies to you
****** Please read the Bar Date Notice carefully to determine if you must file a Proof of
Claim. You should consult with an attorney if you are unsure whether you need to
file a Proof of Claim. A copy of the Bar Date Notice is available at
www.motorsliquidation.com. The Debtors cannot tell you whether or not you
need to file a Proof of Claim.
What is a Bar Date?
A Bar Date is a deadline for filing a Proof of Claim. The Bar Date is set by the
Bankruptcy Court. If you do not file a Proof of Claim by the Bar Date, you will be barred
from asserting your potential claim against the Debtors.
When is the Bar Date?
The Bankruptcy Court set November 30, 2009 at 5:00 p.m. Eastern Time as the Bar
Date.
MOTORS LIQUIDATION COMPANY
BAR DATE NOTICE FAQS
What is a Governmental Bar Date?
Governmental units/agencies typically have their own bar date. Here, the
Governmental Bar Date is the same as the General Bar Date - November 30, 2009.
What is a Proof of Claim form?
The Proof of Claim form is a fill-in-the-blank document that must be completed by the
creditor or the creditor’s legal counsel. Instructions for completing the Proof of Claim
form are set forth on the back of the Proof of Claim form. You will also need to attach
documentation substantiating your claim when you mail your Proof of Claim form.
Why did I receive a Proof of Claim form?
The Debtors mailed the Proof of Claim form to all known and potential creditors,
including, employees, vendors, suppliers, and some customers holding warranty claims.
Where can I find a copy of a Proof of Claim form?
A Proof of Claim form can be found at www.motorsliquidation.com or at the bankruptcy
court’s website at www.uscourts.gov/bkforms.
What is a “claim”?
A “claim” is a right to payment from the Debtors. Please review the Bar Date Notice for
a more detailed description.
I received a Bar Date Notice and Proof of Claim form. Does this mean that I have a
claim?
No. The Debtors must mail the Bar Date Notice to known and potential creditors,
including employees, vendors, suppliers, and some customers holding warranty claims.
You do not necessarily have a right to payment just because you received the Bar Date
Notice and Proof of Claim form.
What if I have a claim and do not file a Proof of Claim by the Bar Date?
You must submit your Proof of Claim form by the Bar Date or you will permanently lose
your potential claim against the Debtors.
MOTORS LIQUIDATION COMPANY
BAR DATE NOTICE FAQS
What is the deadline for filing claims arising from the rejection of an executory
contract?
The deadline is the later of (i) the Bar Date, and (ii) the date which is 30 days from entry
of the order approving the rejection.
Can I get an extension?
No, the Bar Date of November 30, 2009 at 5:00 p.m. Eastern Time was set by the
Court, and all Proofs of Claim must be submitted and actually received by the Debtors
on or before this time.
Can I e-mail or fax the Proof of Claim form?
No. You must mail or hand-deliver your Proof of Claim form to one of the address set
forth below. E-mails and faxes will not be accepted.
Can I send the Proof of Claim form to the Debtors?
No.
Where do I mail my Proof of Claim form?
You must mail your Proof of Claim form to:
If by overnight courier or hand delivery to:
The Garden City Group, Inc.
Attn: Motors Liquidation Company Claims Processing
5151 Blazer Parkway, Suite A
Dublin, Ohio 43017
If by first-class mail, to:
The Garden City Group, Inc.
Attn: Motors Liquidation Company
P.O. Box 9386
Dublin, Ohio 43017-4286
Or if by hand delivery to:
United States Bankruptcy Court, SDNY
One Bowling Green
Room 534
New York, New York 10004Does my Proof of Claim need to be received or stamped by the Bar Date?
Proofs of Claim must be mailed in enough time so that they are physically received on
or before November 30, 2009 at 5:00 p.m. Eastern Time.
MOTORS LIQUIDATION COMPANY
BAR DATE NOTICE FAQS
Where can I view a copy of the Schedules of Assets and Liabilities?
Copies of the Schedules are available electronically at the Debtors’ website
www.motorsliquidation.com, and on the Court’s official docket at ecf.nysb.uscourts.gov
(a user ID and password are required and can be obtained through the PACER Service
Center at www.pacer.psc.uscourts.gov).
You can also examine the Schedules between the hours of 9:00 a.m. and 4:30 p.m.
(Eastern Time) at the office of the Clerk of the Bankruptcy Court, United States
Bankruptcy Court for the Southern District of New York, One Bowling Green, Room 511,
New York, New York 10004.
You can obtain copies of the Schedules by writing the Debtors’ claims agent:
The Garden City Group, Inc.
Attn: Motors Liquidation Company
P.O. Box 9386
Dublin, Ohio 43017-4286
Who do I call or email if I need more information?
The Debtors cannot provide legal advice, tell you how to complete your Proof of Claim
form, or discuss your Scheduled claim. However, if you have specific questions that are
not answered by the Bar Date Notice, the Proof of Claim form, or these FAQs, you may
call or email: 800-414-9607; claims@motorsliquidation.com.

Companies Likely to go Bankrupt Next (according to auditintegrity.com. )

Audit Integrity Announces Results of Corporate Bankruptcy Study; Identifies Companies Most Likely to Declare Bankruptcy
Wed Sep 16, 2009 9:00am EDT

Media and Transportation Sectors Have the Highest Number of Companies at Risk
LOS ANGELES--(Business Wire)--
In response to amplified concern in the market for risk related to corporate
insolvency, Audit Integrity, an independent financial research and risk modeling
firm, today released the results of its bankruptcy model research and has
identified 20 corporations, with $1 billion or more in market capitalization,
that have the highest probability of declaring bankruptcy in the next twelve
months.

According to the U.S. Bankruptcy Courts, the number of business bankruptcy
filings during the first six months of the year rose 64 percent over the first
half results in 2008. With the increased incidence of company failures,
corporate stakeholders such as insurance companies, auditing professionals,
procurement executives and regulators, find corporate survival to be a critical
risk issue.

Current approaches to determining bankruptcy risk generally fail to react
quickly to changes to the economic environment, and do not factor in the
potential for corporate fraud. By incorporating these risk factors into the
Audit Integrity Business Risk Model, this new approach has been found to greatly
improve the identification of companies at risk of bankruptcy. Against the most
widely used bankruptcy model, the Altman Z-Score, the Audit Integrity bankruptcy
Risk Model results have been more than 20 percentage points higher in predicting
bankruptcy.

The results from Audit Integrity`s bankruptcy research indicate that the media
and transportation industries are especially vulnerable. Of the over 2,500 U.S.
corporations receiving bankruptcy risk scores from Audit Integrity, TV and
Publishing companies were found to be over four times as risky as other
companies, while automobile and airline industries were just slightly less
risky.

The findings suggest that fraudulent accounting and poor governance impact
bankruptcy risk in addition to more generally accepted factors such as measures
of liquidity, leverage and profitability.

"Evidence shows that bankruptcy filings tend to lag after an economic downturn
so its extremely important that investors and those concerned with the risks
around corporate failure mitigate their exposure to companies likely to
collapse," said Jack Zwingli, CEO of Audit Integrity. "Market volatility and
sudden downturns such as we have been experiencing must be factored into
bankruptcy risk. Fraud also plays a part, especially when companies are faced
with survival decisions. These are the toughest companies to identify because,
on paper, they appear solvent. Our model uncovers the underlying fraud that can
be behind seemingly healthy financial statements."

Audit Integrity has identified the following companies that have the highest
probability of declaring bankruptcy among publicly traded firms with more than
$1 billion market capitalizations:

* Advanced Micro Devices, Inc.
* Amkor Technology, Inc.
* AMR Corporation
* Apartment Investment and Management Co.
* CBS Corporation
* Continental Airlines, Inc.
* Federal-Mogul Corporation
* Hertz Global Holdings, Inc.
* Interpublic Group of Companies, Inc.
* Las Vegas Sands Corp.
* Liberty Media Corporation (Capital)
* Macy's, Inc.
* Mylan Inc.
* Oshkosh Corporation
* Redwood Trust, Inc.
* Rite Aid Corporation
* Sirius XM Radio Inc.
* Sprint Nextel Corporation
* Textron Inc.
* The Goodyear Tire & Rubber Company

To get the full list of companies Audit Integrity has identified, including
small-cap and mid-cap firms, please visit www.auditintegrity.com or call
877-880-8820.

About Audit Integrity

Founded in 2002, serving investors, insurers, auditors and corporate finance
professionals, Audit Integrity is a leading independent research firm that rates
more than 12,000 public companies in North American and Europe based on their
corporate integrity. In addition to its flagship Accounting and Governance Risk
(AGR) ratings, Audit Integrity also forecasts bankruptcy risk, class action
litigation risk, material financial restatement risk, and equity performance
risk. The statistical correlation of these ratings has been confirmed by
internal and third-party tests. Audit Integrity has offices in Los Angeles and
New York City. For more information, please visit www.auditintegrity.com.





Starkman & Associates
Jeffrey Richardson, 212-252-8545, ext. 11
jrichardson@starkmanpr.com
or
James Cheston, 212-252-8545, ext. 22
jcheston@starkmanpr.com

Copyright Business Wire 2009

The New GM: Initial Public Offering Plans

August 8, 2009
Business Briefing | Company News
General Motors Is Planning to Hold an I.P.O. Next July
By BLOOMBERG NEWS
The General Motors Company, the new automaker majority-owned by the United States Treasury, said Friday that it intended to make an initial public offering of stock by July 10, 2010, the one-year anniversary of its exit from bankruptcy. The target date range for an offering was disclosed Friday in a federal regulatory filing that the company said summarized its activities in the four weeks since it left court protection. G.M. said it was authorized to issue 2.5 billion shares of common stock. G.M. will begin releasing financial data after the third quarter, a spokeswoman, Renee Rashid-Merem, said. The company’s filing did not include financial results. “Today’s disclosures are consistent with our commitment to remain transparent and to keep the public informed of our progress,” the chief executive, Fritz Henderson, above, said in a statement.

MORE FAQS ON THE "NEW" GM (from corporate website, http://phx.corporate-ir.net/phoenix.zhtml?c=231169&p=irol-faq)


1. What is General Motors Company, and how is that different from General Motors Corporation?
General Motors Company is the “new GM.” We were formed when Motors Liquidation Company (formerly named “General Motors Corporation”), used section 363 of the U.S. bankruptcy code to sell the strongest parts of its business to a new company, named “General Motors Company.” Our new company is built upon only the strongest parts of the “old GM” business – our employees; our best brands (Cadillac, Chevrolet, Buick, GMC), and the plants and other hard assets that those brands rely on; the contracts we need to secure supplies and keep our business moving; and the equity in our domestic and global subsidiaries.

2. Is GM out of bankruptcy?
Yes, all of GM’s continuing operations and assets are completely out of bankruptcy and are now operating as an independent and separate company called “General Motors Company”. This includes all operations that interact with customers.

3. Can I buy shares in General Motors Company? Will there be an initial public offering?
There are currently no shares of General Motors Company for sale to the public. It will initially be owned by the U.S. Treasury, the governments of Canada and Ontario, the UAW VEBA and Motors Liquidation Company. We expect that shares of the General Motors Company will be publicly traded in the future, and this may involve an initial public offering. Also, as early as the first quarter of 2010, General Motors Company may be contractually required by its new stockholders to register their stock for sale to the public; however, we do not know when or if any of these stockholders will sell any of their shares.

4. What is Motors Liquidation Company?
After it sold substantially all of its assets in the section 363 sale to General Motors Company, General Motors Corporation was renamed “Motors Liquidation Company.” For the operations, assets and liabilities that were not transferred to General Motors Company, the chapter 11 bankruptcy case will continue in order to resolve creditors’ claims and wind down those operations in an orderly way. Information about Motors Liquidation Company can be found on its website, http://www.motorsliquidation.com.

5. What happened to common stock, bonds and other securities previously issued by General Motors Corporation (now renamed “Motors Liquidation Company”)?
All of the publicly owned stocks and bonds previously issued by General Motors Corporation are still securities of that company, but its name has been changed to Motors Liquidation Company. None of Motors Liquidation Company’s publicly owned stocks or bonds are or will become securities of General Motors Company, which is an independent separate company.


WEBSITE OF THE "OLD" GM
http://www.motorsliquidation.com/?evar10=InvestorInfo_MotorsLiquidation

creditors of OLD GM website:
http://www.motorsliquidationcreditorscommittee.com/

Deadline for Lehman Brothers Claims is September 22, 2009

Making Claims in the Lehman Brothers Bankruptcy:

The deadline for filing of proofs of claims against the Debtors has been established as September 22, 2009 at 5:00 p.m. Eastern Time for all claims

Obtain proof of claim forms from http://chap11.epiqsystems.com/LBH

Questions about the process can be directed to EPIQ BANKRUPTCY SOLUTIONS at
646 282 2500 or via their website www.epiqbankruptcysolutions.com/contact.htm

Municipal Bond Default ( Bloomberg )

Subprime Finds New Victim as Muni Defaults Triple: Joe Mysak


Commentary by Joe Mysak



May 30 (Bloomberg) -- The amount of municipal bonds that have defaulted this year is already more than triple what it was for all of 2007.

And who could doubt there's more bad news on the way?

So far this year, $736 million in municipal bonds have defaulted. That doesn't necessarily mean they didn't pay investors; they may have just drawn down reserves. That's what happens just before they stop making payments to bondholders.

During all of 2007, only $226 million in municipal bonds defaulted, according to the May edition of the ``Distressed Debt Securities'' newsletter, published in Miami Lakes, Florida.

That $736 million is nowhere near the record for municipal bond defaults, to be sure. The record year, if you're counting, was 1991, when almost $5 billion went bust. That's still small potatoes compared with what happens over in the corporate-bond market, where $36.6 billion blew up in 2006, and almost $24 billion in 2007.

But wait a minute: Municipal bonds never default, do they? Or at least this is how they are perceived by individual investors, right?

We're probably going to see a lot more munis default this year and in the years to come, because of the subprime crisis and maybe, just maybe, because of the high price of a barrel of oil.

New Residents

The hangover from the collapse in real-estate prices is going to be a boom in so-called dirt-bond defaults.

These are bonds sold by municipalities to build the infrastructure for housing developments, and are backed by the taxes paid by all the new residents who are going to move in. If no residents move in, or too few do, the bonds aren't repaid.

Of the 30 bond issues that have defaulted so far this year, more than half are from issuers in two of the states that have figured prominently in all tales of the housing bust: 10 in Florida and seven in California.

Consider the $50 million in special assessment bonds sold by the Monterra Community Development District in Broward County, Florida, for example. On May 7, the district disclosed that it had tapped its $1,279,200 reserve fund for $1,211,727.11.

You can just stop right there and know that this story is bound to be a sad one.

These particular bonds were sold by the district in 2006 in a limited offering. The bonds were unrated, and sold in minimum denominations of $100,000. The bonds carried a 5.125 percent coupon due in 2014, and were priced to yield 5.198 percent.

Remember Colorado
The Monterra development is located in Cooper City, which is about 20 miles north of Miami and has a population of almost 30,000. Of the 10 Florida bonds that defaulted this year, all were sold by community development districts, and all within the last four years.

The big jump we are going to see in the number of such municipal bond defaults this year won't be limited to Florida and California, but will include all those places where the high tide of real-estate mania has now receded.

This isn't an uncommon phenomenon after housing busts. In the past, the damage was usually confined to certain states where the boom was craziest, such as Colorado in the 1980s.

More bondholders are going to be affected this time around because the housing collapse is more national rather than regional or isolated, and because of the relatively recent development of so many ``exurbs,'' as chronicled, for example, by New York Times columnist David Brooks in his 2004 book, ``On Paradise Drive.''

Three-Hour Commutes

These are the suburbs beyond the suburbs, where Americans have moved to enjoy the good life, commute (usually) be damned. Not too long ago, the newspapers seemed to be filled with stories about people who gladly commuted two and even three hours each way for affordable real estate. Most people knew actual examples of such hearty souls. I wonder how much gasoline at $4-plus a gallon will dent the growth, and tax base, of such communities.

It's not just the price of gasoline that is going to make the nation's many far-flung communities less attractive. On May 28, Bloomberg carried a story detailing how the increase in the price of jet fuel was causing airlines to curtail service throughout the country.

Maybe we'll have to reconsider this whole flight-from-the- coasts idea that got such attention a few years ago.

(Joe Mysak is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: Joe Mysak in New York at jmysakjr@bloomberg.net

Last Updated: May 30, 2008 00:01 EDT

Obama's deal for GM Bondholders (WSJ)

JUNE 1, 2009 Majority of GM Bondholders Back Debt-for-Equity Deal
By SHARON TERLEP and KEVIN HELLIKER
DETROIT -- General Motors Corp. moved a step closer to what it hopes will be a smooth bankruptcy process after a majority of investors holding $27 billion in the company's bonds agreed to forgive the debt for equity in the new company.

A battle with the group was one of the biggest hurdles GM faced in orchestrating a quick exit from Chapter 11.

The Obama administration plans to usher GM into bankruptcy court Monday as part of its ambitious effort to remake the American car industry at the tail end of its decades-long decline. President Barack Obama is expected to announce the government's plans for GM in a speech that will try to convey the message that the government can rebuild GM and Chrysler LLC and salvage some of the taxpayers' investments.

The auto maker, living on U.S. government loans, faces a Monday deadline imposed by the Obama administration. GM announced Friday that Chief Executive Fritz Henderson would give a press conference on Monday in New York outlining proceedings that would likely take place.

Initially, the company said getting bondholders to agree to a debt swap was its best chance for avoiding Chapter 11. But the latest plan is designed to expedite a bankruptcy filling more than to avoid it. As part of the agreement, bondholders pledged not to oppose GM's reorganization in court.


Under the plan, the Treasury would provide GM with $30 billion in loans to keep running through a bankruptcy, in addition to $20 billion already given to the company. GM won't have to repay the loans; instead, the government will turn them into a controlling stake in the company. The United Auto Workers union would end up with at least a 17.5% stake in the new company after agreeing to concessions that will save GM about $10 billion in obligations to retiree health care as well as billions more on labor costs. In exchange, GM agreed to use a soon-to-be-determined idled plant to build a small car in the U.S.

GM and the Obama administration, encouraged by Chrysler's progress in bankruptcy court over the past month, hope the company could emerge in as little as 30 days. GM, however, could still face challenges from hundreds of dealers its trying to shut down. The company also is still negotiating with Delphi Corp., its bankrupt former parts arm.

It could be six to 18 months before GM becomes a publicly traded company again, administration officials said.

Under its restructuring plan, GM will shed billions in debt, gain billions in work-force savings, will close more than a dozen factories and reduce its network of dealers.

Amid those savings, the most crucial question facing GM -- and every other player in the global automotive industry -- is when demand will return, and with what force. Since January, new-vehicle sales in the U.S. have dropped nearly 40% to an annual rate of fewer than 9.5 million units a year. At that level, even Toyota Motor Corp. is losing money.


Although General Motors is most likely headed for bankruptcy, the car maker used to be king of the road and part of the fabric of American life.
Under the restructuring plan, the new GM would break even when the rate of new-vehicle sales in America reached 10 million a year -- by industry standards a highly competitive benchmark. In the view of analysts, economic recovery will unleash pent-up demand, pushing U.S. sales far past GM's break-even point, if not within reach of the historic peak of more than 17 million new-vehicle sales back in 2000.

But a new GM won't prosper without halting a decades-long slide in U.S. market share, to 22% in 2008 from 45% in 1980. In doing so, it faces a legacy of inconsistent quality that turned large swaths of the American market toward more-reliable foreign models.

Although GM in recent years has made tremendous gains in quality and design, a big question is whether it can maintain that progress following the retirement this year of Robert Lutz as vice chairman of global product development. Legendary for his role in developing such hot models as Chrysler's Dodge Viper and the Ford Explorer, Mr. Lutz came to GM in 2001 and launched a product turnaround that garnered two North American Car of the Year Awards and propelled Buick to the top of the J.D. Power & Associates long-term quality rankings.

GM's most anticipated car-in-the-works -- the electric-powered Chevrolet Volt -- is the brainchild of Mr. Lutz. "Can we keep it going -- that's the million-dollar question," says Jack Keebler, a former Motor Trend editor whom Mr. Lutz hired to review cars during the development process.

Mr. Keebler believes the progress will continue, saying GM has passed "the tipping point."

Bondholders had until Saturday evening to voice support for a new offer that would give them a 10% share of the restructured company and warrants for another 15%.

An ad hoc committee representing major bondholders agreed to support the offer and encouraged other big investors to back the deal. A group of dissident bondholders represented by Thomas Lauria, also a lawyer for holdouts in the Chrysler case, fought against the deal. He argued that small, individual bondholders were left with no voice as the Treasury negotiated directly with GM's large institutional holders.

It was up to Treasury, which brokered the deal, to determine whether enough bondholders agreed for the offer to stand. A spokesman for the bondholder committee said approximately 54% of the bonds have indicated their support and that 975 institutions either sent support letters or gave indications of support.

The government sweetened the offer last week after bondholders overwhelmingly rejected an earlier proposal that would have left them with 10% equity in the new GM.

Analysts' estimates have bondholders coming out of the new deal with around 10 cents on the dollar, compared to as little as nothing under the old offer.

Write to Sharon Terlep at sharon.terlep@dowjones.com and Kevin Helliker at kevin.helliker@wsj.com

Printed in The Wall Street Journal, page A1