A private company??? They are owned by the taxpayers, they are NOT a private company. More of GM lying with a straight face. One more reason to stop the GM bailout and let them die.
GM To Become The Soul Of Discretion
First, how is a company that is majority owned by the government in any way private? Second, why are taxpayers being stiffed for info when, without their ?reluctant ownership,? GM would be wallowing in the ashheap of history right now? Third, if Kresa isn?t lying when he says ?I am sure that we will continue to be very transparent as a company, we have always been transparent and will continue to be that way,? why make this announcement at all? Fourth, where does the Freep get off calling this apparent travesty a case of mere ?discretion?? Fifth, private? Huh?
GM set to become a more discreet company
NEW YORK -- A day after filing for a bankruptcy reorganization that will be largely financed by U.S. taxpayers, General Motors Corp. said the private automaker that emerges from Chapter 11 expects to release less financial information to the public.
"As a privately held company, it's likely we're not going to disclose information except to the shareholders," Ray Young, GM chief financial officer, said Tuesday.
Young noted that the company is expected to eventually go public again, when it will be subject to public reporting requirements. However, the company is still considering how much information to share as a private company.
Young's comments echoed those from GM Chairman Kent Kresa on Monday.
"We do not have to file all of the same documents that we do when we are a public company," said Kresa, who added that GM still would give updates on its progress. "We're going to keep that transparency exactly the same."
GM, which has lost more than $80 billion during the past four years, is staying afloat on $19.4 billion in federal loans and is on the way to receiving at least $30 billion more to finance its Chapter 11 reorganization.
The reconstituted General Motors could begin the process of taking the company public again as soon as the first part of next year, Young said.
GM went into bankruptcy reorganization Monday with plans of selling the good parts of the company off to create a new GM within 90 days.
Most of the shares in the new company will be owned by the U.S. and Canadian governments, as well as the UAW's retiree health care trust. Eventually, though, GM plans to go public again.
"At the earliest, we will probably be talking about the first quarter and second quarter of 2010 in order to start the process of registration of the shares and selling some of the shares to the marketplace," Young said.
On Monday, GM Chairman Kent Kresa said it could take a year from the time the new GM emerges from bankruptcy before it becomes public again.
Once that occurs, Young expects a gradual sell-down by the major shareholders, such as the U.S. Treasury.
"They want an orderly sell-down in order to both not hurt the ... share price of General Motors and, frankly, also in order to maximize the value to the Canadian and U.S. taxpayers," Young said.
Young said the new GM, as a private company, would probably not disclose financial information except to shareholders -- a thought echoed by Kresa.
"We do not have to file all of the same documents that we do when we are a public company and I don't think we will necessarily do that -- it takes a lot of energy," Kresa said.
But Kresa stressed the company will continue to be transparent, even if it doesn't publicly disclose the regular paperwork.
"I am sure that we will continue to be very transparent as a company, we have always been transparent and will continue to be that way," he said.
When Cerberus Capital Management took control of Chrysler in the summer of 2007, the new Chrysler leaders emphasized that they would have an advantage as a private company because they were not forced to disclose their quarterly financial statements to the public.
That way, Chrysler argued it could focus on long-term business decisions that were best for the company as opposed to merely trying to satisfy outside observers on a short-term basis.
However, Chrysler's days as a private company were dogged by questions about the true nature of its finances and eventually the company began issuing unaudited, limited financial statements.
Gerald Meyers, a business professor at the University of Michigan, predicted that GM would face similar skepticism about its finances if the company stops issuing financial information. "It's going to be an issue if they don't disclose the usual information," he said.
While GM will be private for a period of time, the U.S. Treasury will hold a majority stake in the new GM with 60% of the shares. The UAW's retiree health care fund will hold 17.5% of the common shares.
Given that, Meyers said, "It is a public company in that sense. ... The question can rightly be raised about disclosure even though they say they are private."