General Motors Corp. said it will cut 21,000 U.S. factory jobs by next year, phase out its storied Pontiac brand and ask the government to take more than half its stock in exchange for half of GM’s government debt as part of a major restructuring that would leave current shareholders holding just 1% of the company. The struggling automaker said it will offer 225 shares of common stock for every $1,000 in notes held by bondholders as part of a debt-for-equity swap that aims to retire most of GM’s $27 billion in unsecured debt. GM is living on $15.4 billion in government loans and faces a June 1 deadline to restructure and get more government money. If the restructuring doesn’t satisfy the government, the company could go into bankruptcy protection.
GM said in a news release it will ask the government to take 50% of its common stock in exchange for canceling half the government loans to the company as of June 1. GM said it would speed up six additional factory closings that were announced in February, although it did not identify them in its news release. Additional salaried jobs cuts also are coming, beyond the 3,400 in the United States completed last week. Including previously announced plant closures, the restructuring will leave GM with 34 factories at the end of next year, down from 47 at the end of 2008. The company also said it plans to reduce its dealership ranks by 42% from 2008 to 2010, cutting them from 6,246 to 3,605.
