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BEIJING/HONG KONG - China reiterated its opposition on Thursday to a European Union plan to limit airline carbon dioxide emissions and called for talks to resolve the issue a day after its major airlines refused to pay any carbon costs under the new law.
GM trundles toward bankruptcy, but questions remain
DETROIT (Reuters) - General Motors Corp and the U.S. government finalized plans on Sunday for the battered company to reorganize, setting the stage for America's largest-ever industrial bankruptcy and heralding a new and uncertain era for the No. 1 U.S. automaker.
GM will file for Chapter 11 bankruptcy protection on Monday at the U.S. Bankruptcy Court in the Southern District of New York before markets open, according to sources with direct knowledge of the preparations.
Al Koch, a managing director at advisory firm AlixPartners LLP, will be appointed Chief Restructuring Officer at GM, a source familiar with the matter said.
U.S. President Barack Obama is expected to outline GM's next steps on Monday as the federal government prepares to take a more than 70 percent stake in the company in exchange for $60 billion in financing. Nearly half of that money has already been extended this year in emergency aid.
The government's of Canada and Ontario will take an equity or debt position in a restructured GM, but details are still being worked out.
But even as the 100-year-old firm cleared a major hurdle to a smooth passage through bankruptcy with approval of a debt-for-equity exchange, questions remained about the ability of the company to return to viability.
And U.S. auto sales for May are expected to offer little hope for a short-term recovery for the industry.
No. 3 U.S. automaker Chrysler LLC is nearing the end of a court-supervised restructuring in New York to cut debt and non-performing assets, as well as consummate an alliance with Italy's Fiat SpA.
Concluding the debt-for-equity exchange was considered key to ensuring a smoother ride through the bankruptcy process.
Bondholders had until late Saturday to vote on the exchange, which would give them up to 25 percent ownership in a reorganized GM in return for $27 billion in debt.
According to a spokesman for an ad hoc committee of bondholders holding about 20 percent of GM's bonds, 54 percent of debt holders voted in favor.
The company and the Treasury Department declined comment on the exchange results, which do not ensure court approval but give the company an important symbolic victory that bankruptcy experts and analysts say will help GM's case.
"The warrants and the improved capital structure make for an improved recovery for bondholders," Barclays Capital analyst Brian Johnson said. "In terms of the bankruptcy process, we expect the likely bondholder assent to smooth the process."
Obama said in an interview with NBC aired over the weekend that the government was forced to take over GM in order to prevent a collapse that could have brought down other companies and further batter the recession-hit U.S. economy.
"My preference would have been to stay out of it completely," Obama said.
In the past week, GM has also concluded an amended agreement with the United Auto Workers union under which the UAW will receive a 17.5 percent in a restructured company instead of $20 billion in cash.
The UAW also made concessions that some say mark a fresh blow to the once common, well-paid manufacturing jobs that created America's middle class.
SALES AT DECADES LOW
Now that a Chapter 11 filing looks certain, it raises questions about what impact bankruptcy will have on GM's sales, whether proceedings could get bogged down and whether government involvement will help the automaker overcome its core problem -- making and marketing better cars.
U.S. auto sales are already at their lowest level in decades. May sales figures are due on June 2, and expectations are that while dealerships performed better than in April, automakers are likely to report steep declines that reflect the U.S. economic slump.
GM has been losing market share since the early 1980s when it commanded 45 percent of the U.S. market.
It has been hurt by its reliance on a truck-dominated vehicle line-up and by a plunge in demand as credit tightened in 2008.
In late March, the Obama administration put the automaker on 60-day notice to restructure and clinch concessionary deals with its union and bondholders.
(Additional reporting by David Bailey, Soyoung Kim, John Crawley, Walden Siew and Tom Hals; Editing by Ted Kerr)
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