'New General Motors' ready to exit bankruptcy

A whirlwind 40-day bankruptcy for GM was expected to conclude with the closing of a deal to sell key operations and core brands, including Chevrolet and Cadillac, to a new company that will be majority owned by the U.S. Treasury.

Chief Executive Fritz Henderson and Ed Whitacre, a veteran telecommunications executive and incoming chairman, were set to appear at a news conference 9 a.m. ET at the automaker’s Detroit headquarters to mark the launch of that “new GM.”

The automaker’s U.S. sales dropped 36 percent during June when it was mired in bankruptcy and executives said the relaunch of the company offered a chance to try and break that negative association for consumers.

“I’m very much looking forward to the point where we’re operating in the clean air and the name of the company not being associated with bankruptcy,” GM sales chief Mark LaNeve said on Thursday.

Henderson, who took over as CEO when his predecessor Rick Wagoner was ousted by the Obama administration at the end of March, has already detailed plans for a faster-moving and less-bureaucratic company with thinner executive ranks.

GM is cutting its white-collar work force by more than 20 percent by eliminating 6,000 jobs by October. The reduction in executive ranks will slice deeper, with 35 percent planned.

That bid to shake up GM’s long-criticized corporate culture will be a key issue for Henderson as the 100-year-old automaker seeks to relaunch itself.

Steve Rattner, the head of the Obama administration’s autos task force, said earlier this week that it would be “natural” for Henderson to cut layers of management to make the company “a bit closer to the ground, leaner and meaner.”

Another pillar of the plan is GM’s commitment to launch more fuel-efficient cars and to focus its resources on fewer brands, models and dealerships.

GM has burned through $40 billion over the past four years and posted losses of more than $80 billion.

The close of the court-approved sale would mark the completion of an unprecedented effort by the U.S. administration to save GM and Chrysler from liquidation by slashing debt, labor costs and dealerships.

The White House has also disbursed almost $80 billion to shore up the auto industry, including $5 billion in support for auto parts suppliers.

Of that total, $50-billion has been earmarked for GM, emergency financing that will give the U.S. government a more than 60-percent stake in the new GM.

Chrysler exited bankruptcy a month ago after blazing a precedent-setting trail for GM by following an asset sale plan that gave operational control of the smaller automaker to Italy’s Fiat SpA.

As part of the changes to be announced on Friday, Bob Lutz, GM’s outspoken and high-profile former product chief, has agreed to stay on in a new position, a person with direct knowledge of the plan said.

Lutz, 77, had earlier announced plans to retire at the end of the year.

The new GM will have slashed its debt and healthcare obligations by $48 billion, dropped almost 40 percent of the dealers from an unprofitable network and moved to cut loose laggard brands such as Saab, Saturn and Hummer.

The new GM will also take advantage of a new labor contract with the UAW that the company says will put its hourly operating costs on par with Japanese competitors led by Toyota Motor Corp.