Chrysler Buy-out Terms disclosed
Early Retirees to get $70k Pretax
Non-Retiree Buyouts, up to $100k Pretax
Chrysler announced details of its buyout plan, designed to trim its hourly workforce by 11,00 workers. The is an acronym soup. The early retirement plan is the Incentive Program for Retirement (IPR). The buyout plan is the Enhanced Voluntary Termination of Employment Program (VTEP).
For those UAW members who have their 30 years in, the company is offering $70,000 in pretax cash to go. They would receive full retirement benefits. For those who are not eligible for retirement, if they are offered the plan (and not all will be), they will receive cash up to $100k (pretax), and six months of partial benefits including health insurance.
Incentive Program for Retirement (IPR) and an Enhanced Voluntary Termination of Employment Program (VTEP).
Apparently some workers are unhappy because the Canadian autoworkers also received a certificate to buy a Chrysler car. I don't know the details.
Wednesday, February 28, 2007
Lots of Car News . . .
There has been a lot of car news in the past couple days. I've been busy, and I haven't been able to post. Let's see if I can catch up some today. Some of these posts may be sketchy. I also have several half-written posts going back a while that I will try to get out this week.
There has been a lot of car news in the past couple days. I've been busy, and I haven't been able to post. Let's see if I can catch up some today. Some of these posts may be sketchy. I also have several half-written posts going back a while that I will try to get out this week.
Monday, February 26, 2007
New Breath Test Diagnoses Lung Cancer
This one is true, not one of my phoney news stories. Scientists have come up with a breath test to identify patients who have lung cancer. Lung cancer is notoriously hard to detect in its early stages, but this chemical test was found to detect the disease in 75% of the cases. The test is said to be simple and inexpensive. Once the test is perfected, they should make the cigarette manufacturers put a test strip in each carton of cigarettes.
This one is true, not one of my phoney news stories. Scientists have come up with a breath test to identify patients who have lung cancer. Lung cancer is notoriously hard to detect in its early stages, but this chemical test was found to detect the disease in 75% of the cases. The test is said to be simple and inexpensive. Once the test is perfected, they should make the cigarette manufacturers put a test strip in each carton of cigarettes.
More Detailed Speculation on the GM/Daimler Chrysler Deal
The Financial Times (as reported here in the Detroit News) has speculated that a deal for General Motors to take over Chrysler USA would be fueled by Daimler Chrysler purchasing a 20% equity stake in General Motors. Of course, that's pretty much what I predicted when I posted in connection with the first news story of the GM-Chrysler deal. There's absolutely no possibility that a deal will go through unless it is cash-positive to General Motors, because GM has no cash to invest in the deal. Moreover, GM has to get enough cash to pay for the integration costs and the short-term negative cash flow of the Chrysler division. If dealers need to be bought out, the cash outlay could be huge. Here is a clip from the Detroit News Article
Although I haven't seen any articles reporting on this element, don't be surprised if GM doesn't buy the Chrysler Division, but instead, buys the rights and tooling to certain product lines. This would allow Daimler Chrysler to take a huge tax write-off on shutting down its North American operations. It MIGHT trigger an escape clause in dealer contracts. Finally, General Motors (and Daimler Chrysler as GM shareholder) would not be stuck with deadwood. On the other hand, most corporate buyouts are structured as tax-free transactions through the exchange of 80% or more of the stock of one of the entities. Under the asset-sale scenario, I don't know how a tax-efficient result could be reached. Perhaps, if your write down for discontinued assets is high enough, you can afford to report some taxable gain on the minority of assets that are sold.
As I said before, Daimler Chrysler would be unwise to get into a deal that doesn't protect them in the event of a GM bankruptcy. Here's where the investment bankers will really earn their money - in coming up with creative provisions to make sure that happens.
As you are looking at the prospects for a GM/Chrysler deal, keep these factors involved, because they will drive the deal. General Motors has almost no cash, but their stock market price has gone up greatly in the past year, so an equity stake in GM can look like it is worth some real money. Secondly, the stock market has put a null-to-negative value on Daimler Chrysler's North American operations, therefore Chrysler can come out ahead even if it gets no real cash in return for selling Chrysler.
The Financial Times (as reported here in the Detroit News) has speculated that a deal for General Motors to take over Chrysler USA would be fueled by Daimler Chrysler purchasing a 20% equity stake in General Motors. Of course, that's pretty much what I predicted when I posted in connection with the first news story of the GM-Chrysler deal. There's absolutely no possibility that a deal will go through unless it is cash-positive to General Motors, because GM has no cash to invest in the deal. Moreover, GM has to get enough cash to pay for the integration costs and the short-term negative cash flow of the Chrysler division. If dealers need to be bought out, the cash outlay could be huge. Here is a clip from the Detroit News Article
"Since GM is short of cash, an equity deal would make sense if it is interested
in Chrysler, and an equity valuation of Chrysler at, say, 3 billion euros ($3.94
billion), would wind up giving DaimlerChrysler a 20 percent stake in GM," said
Stephen Cheetham, a senior analyst with Sanford C. Bernstein Ltd. said.
"This
kind of deal has some face-saving potential for management, and we believe that
from a shareholder perspective, 20 percent of a combined GM/Chrysler entity is
preferable to owning Chrysler outright," said Cheetham. "However, it does not
give DaimlerChrysler a clean break from equity exposure to the troubled world of
U.S. domestic carmakers, and we would expect the presence of a GM stake to be an
ongoing irritant in (its) relations with investors."
Chrysler earlier this
month announced it lost $1.475 billion in 2006 and said it expects losses to
continue through 2007. Parent DaimlerChrysler, however, earned $4.26 billion in
2006.
Although I haven't seen any articles reporting on this element, don't be surprised if GM doesn't buy the Chrysler Division, but instead, buys the rights and tooling to certain product lines. This would allow Daimler Chrysler to take a huge tax write-off on shutting down its North American operations. It MIGHT trigger an escape clause in dealer contracts. Finally, General Motors (and Daimler Chrysler as GM shareholder) would not be stuck with deadwood. On the other hand, most corporate buyouts are structured as tax-free transactions through the exchange of 80% or more of the stock of one of the entities. Under the asset-sale scenario, I don't know how a tax-efficient result could be reached. Perhaps, if your write down for discontinued assets is high enough, you can afford to report some taxable gain on the minority of assets that are sold.
As I said before, Daimler Chrysler would be unwise to get into a deal that doesn't protect them in the event of a GM bankruptcy. Here's where the investment bankers will really earn their money - in coming up with creative provisions to make sure that happens.
As you are looking at the prospects for a GM/Chrysler deal, keep these factors involved, because they will drive the deal. General Motors has almost no cash, but their stock market price has gone up greatly in the past year, so an equity stake in GM can look like it is worth some real money. Secondly, the stock market has put a null-to-negative value on Daimler Chrysler's North American operations, therefore Chrysler can come out ahead even if it gets no real cash in return for selling Chrysler.
Friday, February 23, 2007
Youtube Video of the Day:
Idol Fav - Lakisha Jones
I didn't see American Idol this week, but the buzz is that the going-away favorite is a singer named Lakisha Jones, from Flint Michigan. Last night she sang the Dream Girls song, And I'm Telling You I'm Not Going. Lakisha's performance isn't on the American Idol website, but for a while, at least, there's a performance of her singing the same song in a different competition on Youtube.com. No question, Lakisha knows how to bring it. The Youtube performance is from a Houston, Texas area competition called Gimme the Mike.
Lakisha finished SECOND in that competition to a country singer named Christy Suggett who also had songs on Youtube. In my opinion, Christy can carry a tune, but she projects the appearance of a generic NASCAR-country singer, happily selling the virtues of redneck life. It's everything I hate about modern country music.
Note that these videos are a good example of the giant wealth transfer engine that is Youtube.com. Copyrighted songs, copyrighted performances, billions of Google dollars going to the Youtube insiders, and nothing going to the artists or the people who created the content.
Idol Fav - Lakisha Jones
I didn't see American Idol this week, but the buzz is that the going-away favorite is a singer named Lakisha Jones, from Flint Michigan. Last night she sang the Dream Girls song, And I'm Telling You I'm Not Going. Lakisha's performance isn't on the American Idol website, but for a while, at least, there's a performance of her singing the same song in a different competition on Youtube.com. No question, Lakisha knows how to bring it. The Youtube performance is from a Houston, Texas area competition called Gimme the Mike.
Lakisha finished SECOND in that competition to a country singer named Christy Suggett who also had songs on Youtube. In my opinion, Christy can carry a tune, but she projects the appearance of a generic NASCAR-country singer, happily selling the virtues of redneck life. It's everything I hate about modern country music.
Note that these videos are a good example of the giant wealth transfer engine that is Youtube.com. Copyrighted songs, copyrighted performances, billions of Google dollars going to the Youtube insiders, and nothing going to the artists or the people who created the content.
Thursday, February 22, 2007
Youtube.com Video of the Day:
The Nigerian Dead Parrot Sketch
If you take the set-up at face-value, this clip linked here is a video of two would-be Nigerian scammers being conned into auditioning for a scholarship by acting out the classic Monty Python Petshop (a/k/a Dead Parrot) Sketch.
Is this the next Numa Numa?
The Nigerian Dead Parrot Sketch
If you take the set-up at face-value, this clip linked here is a video of two would-be Nigerian scammers being conned into auditioning for a scholarship by acting out the classic Monty Python Petshop (a/k/a Dead Parrot) Sketch.
Is this the next Numa Numa?
Wednesday, February 21, 2007
Holy Turbo Pinto Batman
My daddy said son you're going to drive me demento, if you don't stop driving that hotrod Pinto.
1972 Pinto, Lime Green, Turbocharged, Nitrous-injected, work in progress.
In the spirit of equal time, here's a link to a turbocharged 1972 AMC Gremlin.
Chevy fans - sorry, I couldn't find any links to turbocharged Chevettes or turbocharged Vegas.
My daddy said son you're going to drive me demento, if you don't stop driving that hotrod Pinto.
1972 Pinto, Lime Green, Turbocharged, Nitrous-injected, work in progress.
In the spirit of equal time, here's a link to a turbocharged 1972 AMC Gremlin.
Chevy fans - sorry, I couldn't find any links to turbocharged Chevettes or turbocharged Vegas.
Tuesday, February 20, 2007
Nissan to Offer Buyouts to Tennessee Workers
Reuters is reporting that Nissan has announced that it will offer buyouts to all of the workers in its Smyrna, Tennessee assembly plant and Decherd engine plant. The buyouts will be based upon $45,000 plus $500 for each year of service. The buyouts will be voluntary. If the buyout was mandatory, would it be an Altimatum? (Remember, if puns were outlawed, only outlaws would have puns.)
Reuters is reporting that Nissan has announced that it will offer buyouts to all of the workers in its Smyrna, Tennessee assembly plant and Decherd engine plant. The buyouts will be based upon $45,000 plus $500 for each year of service. The buyouts will be voluntary. If the buyout was mandatory, would it be an Altimatum? (Remember, if puns were outlawed, only outlaws would have puns.)
Monday, February 19, 2007
BREAKING NEWS - XM AND SIRIUS AGREE TO MERGE
Some said it couldn't be done, and maybe it can't, but they're going to try anyway. The two major satelite radio networks, XM and Sirius have agreed to a "merger of equals." Apparently they saw that it worked so well for Chrysler.
Some said it couldn't be done, and maybe it can't, but they're going to try anyway. The two major satelite radio networks, XM and Sirius have agreed to a "merger of equals." Apparently they saw that it worked so well for Chrysler.
GM May Ask for Extension to File Annual Report
Rumors that GM may take over Chrysler are flying, and they are largely overshadowing the fact that General Motors has not yet filed its 10k annual report. The latest news reports that GM may ask for a short extension of time to file, bringing the deadline from March 1 to March 16. The same news story reports that GM's figures will include restatements to past year's reports that cumulatively bring GM's retained earnings up by $700 million. This may or may not be significant depending upon GM's other disclosure when the report is issued.
Rumors that GM may take over Chrysler are flying, and they are largely overshadowing the fact that General Motors has not yet filed its 10k annual report. The latest news reports that GM may ask for a short extension of time to file, bringing the deadline from March 1 to March 16. The same news story reports that GM's figures will include restatements to past year's reports that cumulatively bring GM's retained earnings up by $700 million. This may or may not be significant depending upon GM's other disclosure when the report is issued.
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