NEW YORK (MarketWatch) -- Senior officials in the Obama administration said late Sunday the U.S. government will provide $30 billion in financing to General Motors Corp. to allow it to continue to operate through a historic Chapter 11 bankruptcy, expected to last an estimated 60 to 90 days.
Officials confirmed that a majority of GM /quotes/comstock/13*!gm/quotes/nls/gm (GM 0.75, -0.37, -33.04%) bond holders approved the deal to allow the ailing car maker to restructure $27 billion in debt. See full story on GM bondholders.
"For the better part of a century, the General Motors Corporation has been one of the most recognizable and largest businesses in the world," one senior U.S. official said in a prepared statement to reporters. "Today will rank as another historic day for the company -- the end of an old General Motors, and the beginning of a new one."
Describing the process as "painful but necessary," officials said GM will move ahead with plans to close 11 facilities will idle three more. Specific numbers of layoffs will come from GM, officials said.
The U.S. government will own 60% of equity in the new General Motors, with little or no control over day-to-day affairs. The U.S. government will receive approximately $8.8 billion in debt and preferred stock and will name some of the new company's board members.
Officials did not confirm or deny reports that Al Koch, a turnaround specialist, will serve as chief restructuring officer.
An additional $9.5 billion will be lent to GM by Canada and the Province of Ontario, with the Canadian government in line to own 12% of the new GM and receive approximately $1.7 billion in debt and preferred stock. The Canadian government will also have the right to select one initial director.
President Barack Obama is expected to speak about the GM bankruptcy on Monday, with the company also planning a formal announcement before the stock market opens.
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