(Reuters) - General Motors Chief Executive Rick Wagoner resigned under pressure from President Barack Obama’s administration on Sunday as the U.S. government prepared to announce a second bailout for the company and its smaller rival Chrysler.
Wagoner took over as GM’s CEO in 2000, overseeing a 95 percent decline in market value for the nation’s largest automaker. GM has lost about $82 billion (57.8 billion pounds) since 2005 when its problems began to mount in the U.S. market.
Wagoner came under great fire for his stewardship of GM late last year when U.S. lawmakers were debating a bailout for GM. Wagoner had repeatedly said that he intended to stay on, and GM’s board has offered unanimous support for him.
Here are some key events that led up to Wagoner’s resignation.
Slumping North American auto sales lead General Motors to warn that 2005 earnings will be as much as 80 percent below its prior forecast, making it the worst performance since 1992. The warning spurred Standard & Poor’s to caution that it could downgrade GM’s debt to “junk” status.
Fortune magazine cover story says GM headed for bankruptcy. The story cites increasingly grim assessments by Moody’s and S&P that doubt GM will be able to turn around its North American business, which then had a market share of 26 percent.
GM announces a plan to cut costs by $10 billion, suspend its dividend and sell up to $4 billion in assets, such as its Hummer brand, in a bid to shore up cash and survive the deep industry slump.
The hurried restructuring, GM’s second in six weeks, was forced by high fuel prices, a consumer shift away from low-mileage trucks, the weakest U.S. auto sales in a decade and growing investor doubts about the automaker’s ability to ride out the downturn.
GM decides to return two of its leased corporate jets after intense criticism by lawmakers after Wagoner flew to Washington in a private jet to ask for public funds.
GM receives $13.4 billion in emergency government loans from the Bush administration to stave off bankruptcy and prevent a collapse that would have cost hundreds of thousands of jobs.
The money was part of the $700 billion Troubled Asset Relief (TARP) program. Under the loan’s terms, a March 31 deadline is set for GM and Chrysler, which received $4 billion, to prove that they can restructure enough to ensure their survival.
GM said it expected US auto sales in 2009 to drop to their lowest level in 27 years, cutting its forecast to the low end of prevailing expectations and making it all but certain the automaker will post a fifth straight year of losses.
GM requests an additional $16.6 billion in U.S. government loans, for a total of up to $30 billion in loans, and said it would run out of cash as soon as March without new federal funding.
It also said it had not reached deals with bondholders and its major union to reduce some $48 billion in debt but would work to reach those agreements by the end of March.
It promised to step up cost-cutting by reducing its global workforce by 47,000 jobs this year and cutting five additional U.S. plants by 2012. In addition, GM said it would cut its U.S. workforce by another 20,000 jobs by 2012.
GM says it has told U.S. officials it can survive without $2 billion in additional aid it had requested to get through March.
Advisers to GM bondholders say they presented a framework plan to President Obama’s autos task force and GM that provides the company’s best chance for an out-of-court restructuring. They say the plan for a debt-to-equity exchange is consistent with US government restructuring requirements.
Wagoner resigns under pressure from the Obama administration just two days before the March 31 deadline it had to prove to the U.S. government it can become viable and worthy of new federal assistance.
Reporting by Martinne Geller; Editing by Patrick Fitzgibbons