GM CEO Henderson Not Sure of How Many Credit Default Swaps
Update: 10:08 am:
General Motors CEO Fritz Henderson just wrapped up his hour long news conference by noting that he wasn't entirely sure how many of its bond holders had credit default swaps.
A credit default swap is essentially an insurance policy on an investment. In the case of GM, if bond holders have credit default swaps, that means if GM files for bankruptcy they could recover their investments. Such arrangements could make it difficult for GM to get bond holders to accept debt for equity swaps, since some bond holders might do better if GM goes into bankruptcy.
Despite not knowing exactly how many credit default swaps are out there, Henderson said, "It's not something we think is fatal to a bond exchange."
-- Michael Rosenwald
Update: 9:43 am:
A reporter just pointed out to General Motors CEO Fritz Henderson that his company used to be the biggest in the world. So, after the company's troubles are behind it, and it downsizes dramatically, what kind of company will GM be?
"We will be a global company, but the nature of that will change," Henderson said. "We will be lean, flexible, and very customer focused. I'm more focused on getting results than being big."
Henderson pointed out a fact the company has learned the hard way recently: "It’s been my theory over time that big is only good if you use to your advantage."
GM got too big, and now it is shrinking.
-- Michael Rosenwald
Update: 9:31 am:
Fritz Henderson, GM president and chief executive in a press conference going on right now, just outlined some details of the company’s restructuring plans.
“The objective is not to survive, the objective is to develop an operating plan that allows us to win,” he said.
He said GM will phase out the Pontiac brand by no later than 2010 and the company does not expect to build Hummers, Saabs and Saturns beyond 2009.
Instead, the company will focus on what Henderson said are its “four core brands,” which are: Chevrolet, Cadillac, GMC and Buick.
“We need to have a more sustainable business model because, candidly we only want to do this once,” he said. “We want to have this as truly a defining moment for our company.”
On Pontiac, Henderson said he believe car brands need to play offense, not defense, to win. "We didn’t have a strategy that would allow us to win with the Pontiac brand. We didn’t have the resources nor could we provide the marketing muscle behind the brand," he said.
He said the decision to discontinue Pontiac was "a tough decision, but one of many...This is a brand that has a considerable heritage within our company."
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