Posted on 12/08/2008 12:58:45 PM PST by Dr. Marten
Isn’t that just nifty.
Maybe you could apply to replace the search function because it doesn’t work very well.
US Auto Aid Draft Bill: US Would Get Equity Warrants In Cos
Last update: 12/8/2008 4:16:46 PM
By Corey Boles
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)—The federal government would receive equity warrants equal to 20% of the emergency loans it is lending to the Big 3 auto makers to help them keep afloat, according to language in the bill seen by Dow Jones Newswires.
This would enable the taxpayer to potentially benefit if shares in the auto companies increased, the draft said, serving as protection of the public funds being used to prop up the ailing car makers.
The taxpayer would supersede all other creditors to the companies to be repaid once the companies’ financial fortunes turn around.
The loan program will be available to General Motors Corp. (GM), Ford Motor Co. (F) and Chrysler LLP.
The legislative language has been sent to the White House for its consideration, a senior House Democratic aide said.
The aide cautioned that the legislative wasn’t final, and could be changed after the White House review.
A White House source confirmed the legislation had been received, and said the Bush Administration had concerns with aspects of it.
House Speaker Nancy Pelosi, D-Calif., plans to hold a press conference at 4:15 p.m. EST (2115 GMT) to provide an update on the proposed legislation.
All executive compensation would be closely monitored by a “car czar” appointed by the White House to oversee the loan program. Additionally, no bonuses could be paid to the top 25 senior employees, and no golden parachutes of any kind can be paid to departing senior employees.
No dividends can be paid to investors in the three companies while money is owed to the taxpayer.
The terms of the package are similar to the loans made to the financial sector earlier in the fall. The duration of the loans would be for seven years, with an interest rate of 5% charged for the first five years, and 9% charged thereafter.
The “car czar” would be an individual with executive experience appointed with authority to carry out program. The president could appoint additional advisors.
The individual would be tasked with establishing appropriate procedures to ensure the plans submitted to Congress by the three car makers form a viable long-term restructuring plan. Progress of this restructuring must be reviewed within 45 days.
The companies must submit a long-term restructuring program by the end of the first quarter of 2009. The plans must include efforts to rationalize costs, capitalization and capacity in all aspects of the companies operations, the draft says. They must include proposals to restructure existing debt, including the conversion of debt-to-equity if appropriate, it said. The draft also stated the companies must provide information on how they would move toward a product mix and cost structure that would be competitive in the U.S. auto marketplace.
The funds would be borrowed from a program created by Congress last year to lend money to the car makers to allow them to invest in cleaner technology.
More money will be appropriated by Congress to make sure that program can still go forward so that the auto makers are able to comply with tougher new emissions standards.
Any investment decisions of more than $25 million would have to be reviewed by the car czar.
Companies participating in the loan program would have to withdraw from any lawsuits challenging proposed state laws on emissions standards. All three of the Big 3 are currently involved in such legal challenges.
-By Corey Boles, Dow Jones Newswires; 202-862-6601; corey.boles@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today’s most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=TiIH7KXnja6Z6AMTM75w0w%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
December 08, 2008 16:16 ET (21:16 GMT)
GM is an international company. It makes cars all over the world, and unlike its US operation, they are profitable. All of this bailout money is fungible. GM is an American company when it is convenient for them to be. I wonder what percentage of their American cars are actually made in the USA.
LOL— Harpo would welcome them with open arms.
Only the most anti-American liberal free trade globalist could like this....handing out US tax dollars to ship jobs out of America
You get double the wealth redistribution than you would have with just an ordinary bailout...tax subsidies for a business....who takes that American wealth an re-distributes again overseas
(more or less)
Most of the cars sold on the west coast are from Mexico.
They are behaving purely rationally - they are going after profits where most easily obtained
- Building factories in Brazil to sell to that growing market
- Asking money from congress by threatening massive layoffs of unionized workers. It’s a hell of a lot easier way to get cash than selling cars in the USA!
Excellent point about GM making money in other parts of the world. Not that I am for US money going to upgrade factories in Brazil but if you think about it if they make money there that money can help pay bloated union contracts in the US.
In my opinion, the UAW has made them unprofitable, and are forcing them to put their operations in places where they can be profitable.
I watched the Teamsters do the same thing to my secure union job in the trucking industry 25 years ago. They killed the master freight business in the SoCal metro area, and forced all the big companies to pull up stakes.
LOL. Of course, that is not exactly the kind of business model I would want a company to follow. Why spend money to prop up a losing portion of the business and deprive my stockholders of the profits? Or use scarce capital that could be better used to expand the business elsewhere.
I’m just sayin’...
Doggone that is funny. In a laugh-to-keep-from-crying kind of way.
My answer: their own jobs, not yours or mine.
Q:"Do they expect us to go to Brazil and work?"
A: No, not at all. You see...the Brazilians will work cheaper, so no.
I’d still at least have a car for my money.
If my money is going to them, I’d like something for it.
I’m going to go out on a limb and bet that Brazil’s immigration laws (and enforcement) won’t allow many Americans to move there and take jobs even if you were willing to take the lower wages.
“That is selfish, if I may say so”, said the Globalist supporter.
at least the brazilian workers do not vote in american elections.
/s
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