HEMISFEAR
12-19-08, 08:43.34 AM
from DetNews.com
WASHINGTON -- President Bush will announce this morning that he is awarding $13.4 billion in short-term loans to prevent General Motors Corp. and Chrysler LLC from collapse, offering loans with extremely strict conditions.
The plan calls for another $4 billion in February, contingent on Congress opening the second half of the $700 billion Wall Street rescue package. Bush rejected bankruptcy as an option for the automakers.
The White House expects to announce the specific amounts for GM and Chrysler later today and both automakers are expected to sign contracts agreeing to conditions in exchange for loans. The loan is a three-year-loan that is "automatically" callable by March 31 if automakers have not complied with specific conditions. They must show they are viable and have a "positive net cash value."
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The White House said there would not be a "car czar" but that Treasury Secretary Henry Paulson would oversee the program for the remaining 30-odd days of the Bush Administration.
The plan requires automakers to provide warrants for non-voting stock, and they must have strict limits on executive compensation and perks like corporate jets. The government will have the power to block transactions of more than $100 million. The Bush Administration set targets for sacrifice by various stakeholders, but didn't lay out requirements.
"We don't believe its appropriate for the government to dictate" concessions between bondholders, the United Auto Workers and others, the White House said.
The targets include reducing debts by two-thirds via a debt for equity exchange, requiring the UAW to accept half of the health care trust fund payments due in 2010 in the form of stock rather than cash and work rules and wages that are competitive with foreign automakers by the end of 2009. Unlike a proposal by Senate Republicans', the White House didn't make those targets legally binding.
WASHINGTON -- President Bush will announce this morning that he is awarding $13.4 billion in short-term loans to prevent General Motors Corp. and Chrysler LLC from collapse, offering loans with extremely strict conditions.
The plan calls for another $4 billion in February, contingent on Congress opening the second half of the $700 billion Wall Street rescue package. Bush rejected bankruptcy as an option for the automakers.
The White House expects to announce the specific amounts for GM and Chrysler later today and both automakers are expected to sign contracts agreeing to conditions in exchange for loans. The loan is a three-year-loan that is "automatically" callable by March 31 if automakers have not complied with specific conditions. They must show they are viable and have a "positive net cash value."
Advertisement
The White House said there would not be a "car czar" but that Treasury Secretary Henry Paulson would oversee the program for the remaining 30-odd days of the Bush Administration.
The plan requires automakers to provide warrants for non-voting stock, and they must have strict limits on executive compensation and perks like corporate jets. The government will have the power to block transactions of more than $100 million. The Bush Administration set targets for sacrifice by various stakeholders, but didn't lay out requirements.
"We don't believe its appropriate for the government to dictate" concessions between bondholders, the United Auto Workers and others, the White House said.
The targets include reducing debts by two-thirds via a debt for equity exchange, requiring the UAW to accept half of the health care trust fund payments due in 2010 in the form of stock rather than cash and work rules and wages that are competitive with foreign automakers by the end of 2009. Unlike a proposal by Senate Republicans', the White House didn't make those targets legally binding.