GM CEO says automaker still can avoid bankruptcy

DETROIT - With just a month left to check off a daunting list of restructuring moves, General Motors Corp.'s new chief executive officer says it is still possible the company can avoid following Chrysler into bankruptcy.

But Fritz Henderson, who took over the automaker when the Obama administration ousted Rick Wagoner, is closely watching what is going on with Chrysler L.L.C. in front of a U.S. Bankruptcy Court judge in New York.

"I think it's still possible that we stay out of bankruptcy," Henderson said yesterday in an interview with the Associated Press. "Our preference is to accomplish our goals outside of the bankruptcy process. But if we're going to go through one, then we're going to learn from Chrysler's experience."

Henderson, speaking in his office on the 39th floor of one of GM's office towers in downtown Detroit, also said a counteroffer the company's bondholders made last week was unacceptable because it did not meet requirements imposed by the government.

A key issue for GM is getting 90 percent of its bondholders to accept a debt-exchange offer. GM is offering them a 10 percent stake in the company if they give up $27 billion in unsecured debt, but the bondholders' counteroffer seeks a 58 percent ownership stake.

Henderson essentially rejected the counteroffer, saying GM cannot do it because it has been told by the Treasury Department that it cannot give more than 10 percent equity to the bondholders.

GM has been living on $15.4 billion in U.S. government loans as it struggles against the worst climate for auto sales in more than two decades. The nation's largest automaker faces a June 1 government deadline to finish restructuring or be forced into Chapter 11 bankruptcy protection.

To finish, it must cut its bond debt, cut labor costs, and shrink to the point where the government says it believes it can be competitive.

GM said last week that it would soon announce six more factory closures in North America as part of the restructuring, but it did not identify them.

Henderson said the restructuring should not have to go deeper than the six.

The company would like to negotiate manpower reductions because of the closures with the United Auto Workers union, which until last week was tied up negotiating a deal with Chrysler, he said. GM has said a new round of buyout and early-retirement offers is likely.

Because of the Chrysler talks, GM is just starting to resume bargaining in earnest with the UAW for a concession agreement that likely will follow the pattern of one reached with Chrysler last week. That deal gives the UAW a 55 percent stake in the new Chrysler in exchange for $6 billion of the $10.6 billion the company must pay into a union-run trust that will take over retiree health care expenses starting next year.

The deal also will spread out the remaining $4.6 billion in trust payments through 2023.