GM Announces Agreement With U.S. Treasury And Canadian Governments Providing Fast...

GM Announces Agreement With U.S. Treasury And Canadian Governments Providing
Fast Track To Competitive Future For 'New GM'

NEW GM, BUILT FROM COMPANY'S STRONGEST OPERATIONS, EXPECTED TO LAUNCH IN 60-90
DAYS UNDER NEW OWNERSHIP

GM FILES VOLUNTARY CHAPTER 11 TO IMPLEMENT '363' SALE AGREEMENT

GM IS OPEN FOR BUSINESS IN THE U.S. AND WORLDWIDE, HONORING ALL CUSTOMER
COMMITMENTS

-- Warranty, service and customer support continue uninterrupted, backed by
the U.S. and Canadian governments

-- Essential suppliers to be paid in the normal course

-- Employees to be paid in the normal course

-- Operations outside U.S. not included in court filing

DETROIT, June 1, 2009-- General Motors Corp. (NYSE: GM) today announced that
it has reached agreements with the U.S. Treasury and the governments of Canada
and Ontario to accelerate its reinvention and create a leaner, stronger "New
GM" positioned for a profitable, self-sustaining and competitive future.

Pending approvals, the New GM is expected to launch in about 60 to 90 days as
a separate and independent company from the current GM ("GM"), with two
distinct advantages: it will be built from only GM's best brands and
operations, and it will be supported by a stronger balance sheet due to a
significantly lower debt burden and operating cost structure than before. The
New GM will incorporate the terms of GM's recent agreements with the United
Auto Workers (UAW) and Canadian Auto Workers (CAW) unions and will be led by
GM's current management team.

The New GM will execute the key elements of its April 27 viability plan, along
with additional initiatives, to achieve winning financial results by putting
customers first, concentrating on adding to the company's line of
award-winning cars and trucks through four core brands and continuing to
invest in green, energy-saving technologies.

Under its plan, GM will sell substantially all of its global assets to the New
GM. To implement the sale agreement, GM and three domestic subsidiaries have
filed voluntary petitions for relief under chapter 11 of the United States
Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New
York, and the sale is subject to the approval of the Court. Because GM's sale
of assets to the New GM already has the support of the U.S. Treasury, the UAW
and a substantial portion of GM's unsecured bondholders, GM expects the sale
to be approved and consummated expeditiously.

GM has asked the Court to approve a number of steps to protect current and new
GM customers, ensure that its operations will continue uninterrupted during
the court-supervised process, and provide for a smooth transition to the New
GM.

-- GM dealers will continue to service GM vehicles and honor GM
warranties,
and U.S. and Canadian government guarantees of manufacturers'
warranties are designed to reassure consumers.

-- GM will use its cash-on-hand and a new Debtor-in-Possession (DIP)
financing of approximately $33 billion to: ensure an uninterrupted
supply of goods and services and provide for other cash requirements
prior to closing of the asset sale; fund liabilities to secured
lenders;
and provide contingency funding to handle any potential unexpected
needs. Furthermore, in conjunction with the sale, the U.S. Treasury
and
the Canadian and Ontario governments will provide funds to administer
the wind down of the remaining assets and the closing of the chapter
11
cases.

-- GM employees worldwide will become part of the New GM.

"Today marks a defining moment in the reinvention of GM as a leaner, more
customer-focused, and more cost-competitive company that, above all, can
quickly generate winning bottom line results," said Fritz Henderson, GM
president and CEO. "The economic crisis has caused enormous disruption in the
auto industry, but with it has come the opportunity for us to reinvent our
business. We are going to do it once and do it right. The court-supervised
process we are pursuing provides us with powerful tools to accelerate and
complete our reinvention, as well as strong safeguards for our customers and
our business. We are focused on the job at hand, for the benefit of our
customers, employees, dealers, suppliers, retirees, taxpayers, investors and
other stakeholders.

"We recognize the sacrifices that so many have been asked to make as we have
worked to reinvent GM and the automobile," said Henderson. "GM deeply
appreciates the support and the demonstration of confidence in our future by
President Obama, the Presidential Task Force on Autos, the Canadian and
Ontario governments, American and Canadian taxpayers, the unsecured
bondholders who are supporting the proposed sale transaction, the UAW and CAW
and their leadership, and the men and women of GM, including our retirees.
You have enabled us to carry out this vital transformation for the good of GM,
our customers and the economy, and we are working to validate your trust each
day.

"From day one, the New GM will be well-positioned to capitalize on the
award-winning vehicles we have developed and launched during the past few
years, and on our investments in exciting new technologies like the Chevy
Volt, so that we can build and return value to our customers and to the
millions who will have a stake in our success. The New GM will play a critical
role in the future of the automobile, and assure that the U.S. has a strong
stake in this rapidly changing global manufacturing industry," Henderson said.

Business operations continue globally without interruption

GM's North American manufacturing operations continues to monitor production
output to make sure it aligns with market demand, and currently intends to
ramp up manufacturing operations as market demand improves during the latter
half of the year.

None of GM's operations outside of the U.S. are included in the U.S. court
filings or court-supervised process, and these filings have no direct legal
impact on GM's plans and operations outside the U.S. GM confirmed that all
business operations are continuing without interruption in its Europe; Latin
America, Africa and the Middle East; and Asia Pacific regions.

"Worldwide, GM dealers are open for business, offering competitive financing
options on our award-winning vehicles, continuing to honor our
industry-leading warranty coverage, and providing outstanding service," said
Henderson. "Furthermore, the U.S. Treasury and the Canadian governments have
issued a strong vote of confidence by backing GM's vehicle warranties."

GM has filed various "first day" motions with the Court to ensure the
company's continued ability to conduct normal business operations. Upon Court
approval, GM will be expressly authorized, among other things, to:

-- Honor all obligations to customers and continue customer programs,
including warranties, without interruption

-- Respect our operating and financing agreements with GMAC, supporting
continued wholesale financing for dealers and retail financing for
customers

-- Pay dealers' open accounts and continue warranty and incentive
programs

-- Pay essential suppliers and logistics providers for goods and services
provided before and after the company's court filings

-- Continue pay and benefits for employees and retirees; however, the
amount of non-qualified pension for some executive retirees may be
affected.

The New GM

GM's agreements with the U.S. Treasury, the Canadian and Ontario governments
and the UAW and CAW, in addition to the support of a substantial portion of
GM's unsecured bondholders, will enable the New GM to be a leaner, faster and
more customer-focused enterprise, consistent with the vision, goals and plans
of GM's enhanced operating plan announced April 27.

The New GM will:

-- Focus on four core brands in the U.S. - Chevrolet, Cadillac, Buick and
GMC - with fewer nameplates and a more competitive level of marketing
support per brand

-- Effectively close the competitive gap in active worker labor costs
compared with transplant auto manufacturers

-- More efficiently utilize U.S. capacity while increasing over time the
percentage of U.S. sales manufactured domestically

-- Feature lower structural costs enabling its North American region to
break even (on an adjusted EBIT basis) at a U.S. total industry volume
of approximately 10 million vehicles. This rate is substantially below
the 15 to 17 million annual vehicle sales rates recorded from 1995
through 2007

-- Achieve its lower structural costs in part by further reducing 2009
salaried employment in North America from its year-end total of 35,100
to approximately 27,200, and continuing to improve its balance sheet
by
reducing retiree benefits for salaried retirees and non-UAW hourly
retirees

-- Provide a higher level of customer service through a more focused U.S.
network of approximately 3,600 dealers

-- Continue and increase its investment and leadership in fuel economy
and
advanced propulsion technologies

Capital Structure of the New GM

A critical element of GM's reinvention is to achieve a significantly stronger
and healthier balance sheet. On March 31, 2009, GM reported consolidated debt
of $54.4 billion, along with additional liabilities, including an estimated
$20 billion obligation to the UAW VEBA.

Under GM's agreements with the U.S. Treasury, the Canadian and Ontario
governments, and the UAW and CAW, and with the support of a substantial
portion of GM's unsecured bondholders, upon closing of GM's sale of assets to
the New GM, the New GM's capital structure will be comprised of:

-- Approximately $17 billion in total consolidated debt, including:
-- $6.7 billion of debt owed to the U.S. Treasury
-- $1.3 billion of debt owed to the Canadian and Ontario governments
-- $2.5 billion of notes issued to the new Voluntary Employee
Beneficiary Association (New VEBA)

-- Approximately $6.8 billion of other, primarily international debt,
but excluding Europe

-- $9 billion of perpetual preferred stock with a 9 percent annual
dividend, payable quarterly in cash, $2.1 billion of which will be
issued to the U.S. Treasury, $0.4 billion of which will be issued to
the
Canadian and Ontario governments and $6.5 billion of which will be
issued to the New VEBA

-- Common equity, 60.8 percent of which will be owned by the U.S.
Treasury,
11.7 percent of which will be owned by the Canadian and Ontario
governments, 17.5 percent of which will be owned by the New VEBA, and
10
percent of which has been reserved for GM for the benefit of the
unsecured bondholders and other unsecured creditors of GM

-- Warrants granted to the New VEBA to acquire newly issued shares in the
New GM equal to 2.5 percent of its outstanding common equity

-- Warrants granted to GM at closing to acquire newly issued shares in
the
New GM equal to 15 percent of its outstanding common equity, with
various exercise prices and expirations

Other than the $8 billion of debt owed to the U.S. Treasury and the Canadian
and Ontario governments by the New GM, all amounts owed by GM or the New GM to
the U.S. Treasury and Canadian and Ontario governments would be equitized in
exchange for the New GM securities described above, and no other debt will be
owed by GM to the U.S. Treasury and the Canadian and Ontario governments.

GM Europe Restructuring

GM announced separately today, GM Europe has an agreement for €1.5 billion of
bridge financing from the German government and a Memorandum of Understanding
to partner with Magna International Inc. Under the agreement, the
Opel/Vauxhall assets have been pooled under Adam Opel GmbH, with the majority
of the shares of Adam Opel GmbH being put into an independent trust (the
balance to remain with General Motors), while final negotiations with Magna
proceed. Negotiations to close the agreement should take several weeks.
Additional details will be available at http://media.gm.com/eur/gm/en/.

New products and technologies on track

The New GM, with its strong financial base and best-in-class dealer network,
will support a portfolio of award-winning vehicles, including the Chevy Malibu
(2008 North American Car of the Year and J.D. Power and Associates' segment
leader in its 2008 Initial Quality Survey), Cadillac CTS (Motor Trend Car of
the Year) and its Buick brand (tied for 1st place in J.D. Power and
Associates' 2009 Vehicle Dependability Study). The New GM will have a number
of key vehicle launches in 2009 and 2010, including:

-- Chevrolet Camaro, a dramatic, moderately priced sport coupe with
highway
fuel economy of up to 29 mpg
-- An all-new Buick LaCrosse premium midsize sedan
-- The luxury midsize Cadillac SRX crossover and CTS Sport Wagon
-- The Chevy Equinox and GMC Terrain, midsize crossovers with
class-leading
highway fuel economy of 32 mpg
-- The Chevy Cruze, GM's new global compact car

-- The revolutionary Chevy Volt, an extended-range electric vehicle that
can travel up to 40 miles on battery power alone

"Our products are our future, and our lineup of new cars and crossovers are a
great foundation for success," said Henderson. "The New GM is here to stay,
and our brands position us to compete well in profitable segments with
vehicles that are second-to-none."

GM also reaffirmed its commitment to improve the fuel efficiency of its
vehicle fleet, meet or exceed new federal fuel economy and emissions
regulations, and push ahead with advanced propulsion technology. GM will
launch the Chevrolet Volt extended range electric vehicle in 2010, expects to
have 14 hybrid models in production by 2012, and will have 65 percent of
vehicles alternative-fuel capable by 2014.

"The New GM will become a long-term global leader in the development of
fuel-efficient and advanced-technology vehicles," said Henderson. "In doing
so, the New GM will contribute to the development of advanced engineering and
manufacturing capabilities in the United States, which are critical to the
future of the U.S. economy."

GM's primary bankruptcy counsel is Weil, Gotshal & Manges LLP. GM is also
represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as
counsels. Cravath, Swaine, & Moore LLP is providing legal advice to the GM
Board of Directors. GM's restructuring advisor is AP Services LLP and its
financial advisors are Morgan Stanley, Evercore Partners and the Blackstone
Group LLP.

More information about GM's chapter 11 cases is available at
www.GM.com/restructuring.
Court filings and claims information are available at www.GMcourtdocs.com.

About GM

General Motors Corp. (NYSE: GM), one of the world's largest automakers, was
founded in 1908, and today manufactures cars and trucks in 34 countries. With
its global headquarters in Detroit, GM employs 234,500 people in every major
region of the world, and sells and services vehicles in some 140 countries.
In 2008, GM sold 8.35 million cars and trucks globally under the following
brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's largest national market is
the U.S., followed by China, Brazil, the United Kingdom, Canada, Russia and
Germany. GM's OnStar subsidiary is the industry leader in vehicle safety,
security and information services. More information on GM can be found at
www.gm.com.

Forward Looking Language

This news release and management's comments on it contain "forward-looking
statements." These statements are based on GM management's current
expectations and assumptions, and as such involve a number of risks,
uncertainties and other factors that could cause actual results to differ
materially from those that we now anticipate -- both in connection with the
Chapter 11 filings we are announcing today and GM's business and financial
prospects. Those risks are described in GM's Annual Report on Form 10-K for
the fiscal year ended December 31, 2008 which was filed March 5, 2009, GM's
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009
which was filed on May 8, 2009, GM's Current Report on Form 8-K filed on May
14, 2009 and other GM filings with the Securities and Exchange Commission.

Contacts:
Renee Rashid-Merem
Phone: 313-665-3128
Cell: 313-701-8560
Email: renee.rashid-merem@gm.com

Tom Wilkinson
Phone: 313-667-0366
Cell: 313-378-6233
Email: tom.wilkinson@gm.com

Randy Arickx
Phone: 313-667-0006
Cell: 313-268-7070
Email: randy.c.arickx@gm.com

For additional media information visit http://media.gm.com.

/PRNewswire -- June 1/

SOURCE General Motors Corporation