GM plans to announce stepped up cost cuts

ERJ staff report (TB)

Detroit, Michigan (Reuters) -- General Motors is set to announce later today an accelerated restructuring that would close additional plants and pave the way for a debt exchange by the struggling automaker, sources briefed on the plan said on Saturday.

CEO Fritz Henderson has scheduled a news conference for Monday morning (US time) to discuss the automaker's revised viability plan. He had said earlier in April that GM would provide more frequent updates.

The accelerated restructuring plan to be announced by Henderson will also be filed with the U.S. Securities and Exchange Commission, allowing GM to proceed with an offer to exchange debt owed to bondholders for equity, said the sources who asked not to be named because the plan was not yet public.

GM's bondholders are owed $28 billion and face pressure to write off more than two-thirds of what they are owed.

Automotive News and several other news outlets have reported that GM is planning to announce the elimination of the Pontiac brand. It was not clear today if the fate of Pontiac will be on Monday's agenda.

The stepped up restructuring effort comes as GM faces a June 1 deadline to come up with a plan for deeper and swifter cuts to satisfy the Obama administration.

Although the plan was expected to highlight GM's need to close more U.S. production facilities, it was not expected to identify the plants by name pending negotiations with the UAW, one of the sources said.

GM received an additional $2 billion in federal support on Friday, bringing its total direct government assistance to $15.4 billion. This doesn't include other federal assistance given to GMAC Financial Services or the U.S. supply chain.

From TAutomotive News (A Crain publication)