December 2, 2008 / 9:35 PM / in 9 years

FACTBOX-Details of GM plan submitted to Congress

6 Min Read

DETROIT, Dec 2 (Reuters) - General Motors Corp (GM.N) on Tuesday submitted the accelerated restructuring plan demanded by Congress, saying it needed up to $18 billion in loans and credit lines from the government.

GM said it needed to receive $4 billion of that U.S. government financing this month to survive. [ID:NO2370969]

It said it would aim to convince bondholders and the United Auto Workers union to accept the kinds of concessions companies typically seek in bankruptcy.

Following are details of GM's latest business plan, under which the automaker said it could cut costs enough in order to break even in a recession-wracked U.S. vehicle market.

Request for Federal Funding

* GM is requesting up to $18 billion in government financing. That includes a term loan of up to $12 billion and a $6 billion revolving line of credit.

* GM needs $4 billion of the funding by the end of December to avoid failure and $12 billion by March 2009

* GM would offer the government equity warrants in exchange for the financing

* GM intends to begin to repay government financing as soon as 2011.

* Government loan disbursements would be monitored by a federal oversight board

* Loan would be callable if GM fails to meet its performance targets under the turnaround plan

* Government loans would be senior to other debt, but the exact nature of the capital structure remains to be worked out

*GM has also applied for $3.6 billion in taxpayer-backed loans from the U.S. Department of Energy and will make a second loan application to offset the cost of retooling factories to make more fuel efficient cars.

Debt Swap, Ban on Dividends

* Including a $21 billion obligation to the UAW related to a trust fund for retiree health care, GM carries $65.6 billion in debt.

* GM is looking to reduce its debt by about $35.6 billion and will begin immediate negotiations with bond holders.

* "The plan is to achieve what would otherwise be achieved by a bankruptcy filing," said GM Chief Operating Officer Fritz Henderson.

* Trade credit and customer warranties, which are not carried on the balance sheet, will not be affected.

* GM common stock will not pay a dividend during the period the automaker has taken government funding.

Sales Outlook

* GM expects to cut costs to be able to break even with industry-wide U.S. vehicle sales of between 12.5 million and 13 million units.

* GM plan hinges on maintaining near 22 pct U.S. market share.

* Restructuring plan targets three scenarios for industry-wide U.S. sales: "baseline," "downside" and "upside." All forecasts include light-vehicles and some medium-duty trucks.

* Even under the most optimistic sales assumption, U.S. car and truck market would be smaller in 2012 than it was in 2007

* "Baseline" forecasts for U.S. vehicle market: 2009: 12 mln units, 2010: 13.5 mln units, 2011: 14.5 mln units, 2012: 15 million units.

*"Downside" forecasts: 2009: 10.5 mln units, 2010: 11.5 mln units, 2011: 12 mln units, 2012: 12.8 mln units.

*"Upside" forecasts: 2009: 12 mln units, 2010: 14 mln units, 2011: 15.5 mln units, 2012: 16.2 mln units.

Cutting Brands, Models, Dealers

* GM will look to drop its Pontiac, Saab and Saturn brands in addition to Hummer, now being shopped to potential bidders.

* GM will focus on Chevy, Cadillac, Buick and GMC. Those four brands represent about 83 pct of current sales.

* Pontiac will become a specialty niche brand with few vehicles on offer.

* Saab will be shopped globally to potential bidders.

* GM will meet with Saturn dealers to consider options for the failed brand.

* The number of GM models on offer will drop from 48 in 2008 to 40 by 2012.

* GM will look to cut dealers from about 6,450 in 2008 to 4,700 by 2012, mostly by reducing showrooms in major U.S. cities and suburbs.

Management Compensation Cuts

* CEO Rick Wagoner will work for a $1 salary in 2009 and will not receive a bonus for 2008 or 2009.

* GM directors will receive only a $1 retainer in 2009.

* GM President and COO Fritz Henderson will have his compensation cut by 30 pct.

* Other senior executives will take 20 percent pay cuts.

* GM will cease all corporate aircraft operations.

Uaw Negotiations, Labor Costs, Payroll

* GM has begun negotiations with UAW to change terms of 2007 contract to cut jobs, close plants and increase the number of "tier-two" workers hired in at lower wages.

* GM expects U.S. hourly labor costs to be competitive with Toyota Motor Co (7203.T) by 2012.

* GM plans to close 9 additional plants by 2012, taking the number of North American production facilities to 38 from 47 currently.

* GM expects to take its U.S. employment from 96,000 workers in 2008 to between 65,000 to 75,000 by 2012

*GM expects to take manufacturing costs down from $8.1 bln in 2008 to $4.5 bln in 2012; expects recurring "structural" costs to drop from $30.3 bln in 2008 to $23.2 bln in 2012.

Fuel-Efficiency Standards, Alternative Vehicles

* GM expects to meet 40 pct improvement in fleet-wide average fuel economy to 35 miles per gallon by 2020.

* GM will continue investment in alternatives to traditional internal combustion-powered vehicles like the battery-powered Chevy Volt.

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