GM, Chrysler Seek $20B in New Aid, Announce Layoffs

Update: GM will terminate various brands over time including Saab and Saturn. GM also announced it will reduce dealers to 4,000 from 6,000 over the next 5 years. There are also concerns GM may leave Canada, but Canadian PM Stephan Harper said he’s confident that will not happen as his government has had close talks with GM. GM is also seeking help from Sweden and Germany.

GM and Chrysler are now asking the U.S. Fed for an additional $21.6 billion. GM says the company needs as much as $30 billion in new aid by 2011, and needs $9.1 billion right now. Chrysler said it needs $9 billion right now as well. Both companies have announced new cost cutting measures that include new massive job cuts. GM says it will cut 20,000-30,000 jobs in the U.S. by 2011, bringing the total job cots to about 30,000 with Chrysler over the next couple of years. GM says the new aid is required due to very weak sales. Read the full story


Teck Cominco Posts $607M Q4 Loss

Vancouver-based miner Teck Cominco has just posted a massive Q4 $607 million ($1.28 per share) loss. Revenue in the quarter was up from $1.5 billion to $1.7 billion YoY. The company has been hard hit by one-time charges, write-offs and slumping commodity prices. “Average base metal prices were down significantly from average prices in the fourth quarter of 2007, with two of our major products, copper and zinc, down 45% and 55%, respectively,” said the company. Teck Cominco also wrote down a total of $844 million in goodwill, including on its Fording Canadian Coal Trust acquisition in 2008. Moody’s Ratings lowered its credit rank to Ba3 from Ba1, also giving the company a bad outlook.


Sirius XM Radio Saved As $172M Debt Deadline Approaches

siriusSirius XP Radio was close to filing for Chapter 11 bankruptcy as a $172 million debt deadline was approaching. Today, Liberty Media struck a $430 million with Sirius. Under the deal, Sirius XM will receive $280 million, $250 million of which today, at 15% with a December 2012 maturity. In the second and final phase of the plan, Sirius will receive $150 million, in exchange for 12.5 million preferred convertible 40% common stock shares. Liberty Media has also agreed to purchase up to $100 million of existing Sirius outstanding debt. Liberty Media will get two seats on the Sirius board part of the deal. The newly raised capital will be used to pay the current $172 million debt and to support continuing operations.


Obama to Unveil Foreclosure Plan, Banks Halt Foreclosures

bank-of-americaThe Obama Administration is getting ready to unveil a new $50 billion+ plan to halt home foreclosures and to help struggling home owners get lower monthly payments to avoid foreclosure. In 2008, foreclosures were up 81% over 2007, with 2.3 million foreclosed. Press Secretary Robert Gibbs said Friday the plan would be designed to help “the 10,000 Americans each day that have their homes foreclosed on, ” The Bank of America along with JPMorgan Chase and Morgan Stanley have agreed to halt foreclosures until March 6, 2009.

JPMorgan Chase CEO Jamie Dimon said, “We stand ready to work with you…to reduce the incidence of foreclosure and to encourage long-term, sustainable home mortgages,”

Importantly, in 2009 so far, 13 banks have failed in the U.S., including Corn Belt Bank, Riverside Bank, Sherman County Bank, Pinnacle Bank, among others, amid the global financial credit crisis.


Warren Buffett’s Berkshire Hathaway Takes on $250M Tiffany & Co Debt

Billionaire investor Warren Buffett’s Berkshire Hathaway has just purchased $125 million of eight-year bond notes and an additional $125 million in ten-year bond notes from luxury jewelry maker Tiffany & CO., meaning Berkshire Hathaway has effectively taken on $250 million of debt from the company. Both bonds are structured to yield Berkshire 10% According to Merrill Lynch, the average U.S. bond yielded 7.37% in 2008/ Tiffany & Co. says the new proceeds will be used to fund continuing operations and to refinance current debt.

Read the full story


Canada Sees First Trade Deficit in 30 Years

New figures released today indicate Canada has experienced its first trade deficit since 1976. January 2009 was the worst with a staggering $1 billion trade deficit, given only 6 months later Canada had a $6 billion surplus. The trade deficit can be attributed to slumping prices and demand of oil and natural gas. The U.S. credit freeze has also contributed to less goods being shipped from Canada as U.S. consumer spending continues to crawl. Canadian PM Stephen Harper is urging Parliament to pass a stimulus package to get cash injected into the economy to encourage spending. Canada should move into a trade surplus after the economic stimulus packages help pull the economies out of recession.


Certicom Agrees to RIM Takeover

rimCerticom Board of Directors has now approved RIM’s takeover bid, agreeing to a CND $131 million cash takeover. RIM initially offered Ceritcom $1.50 per share (a 76.5% premium over Certicom’s December 3, 2008 stock price) or about $66 million cash, but the company declined the offer after winning an Ontairo Court injunction on the basis RIM used confidential information in its bid. California based Verisign later offered $2.10 per share, only to be trumped by RIM’s latest $3 winning bid. Certicom still retains the right to cancel the RIM takeover if another company offers another higher bid.


Sirius XM to File for Bankruptcy

Reports indicate Sirius satellite radio is preparing to file for chapter 11 bankruptcy as the company has hired bankruptcy advisors. Sirius currently holds more than $3 billion of debt and a bankruptcy could see heavyweight partners like Howard Stern off the air as the company would be unable to pay them. The company’s biggest customer base comes from automobile partnerships such as with Ford, which represents more than 20 million listeners and continues to decline thanks to poor car sales. Charles Ergen, founder of EchoStar and Dish Network, has previously offered to give Sirius XM enough capital to meet debt obligations, and also expressed interest in buying out the company. There is no word if a deal could be reached, but it is unlikely given Ergen’s previous offer was turned down.


GM Announces 10,000 Job Cuts in 2009

GM has announced more massive layoffs, 10,000 to be exact by the end of the year, citing the cuts are unavoidable given falling demand. GM already specified in a filing to the fed it would cut jobs to cut costs and planned also mentioned it intended to reduce its total U.S. headcount to 65,000-75,000 by 2012 from about 97,000 people. The new layoffs also in line with an upcoming Congressional review given the $9.4 billion GM has received in Federal aid from the Treasury Department. The fed retains the right to demand repayment on March 31, 2009 if it concludes GM is not viable in the long term. GM is expected to receive an additional $5 billion or more in the coming year.


World’s Largest Platinum Maker Anglo Platinum Announces 10,000 Job Cuts

The world’s biggest platinum producer Anglo Platinum has announced staggering job cuts. The company CEO Neville Nicolau said Anglo Platinum would cut up to 8,000 jobs in the first half of 2009, with up to an additional 2,000 jobs by the end of the year thanks to falling prices. The job cuts are mainly coming from mining positions. The company is doing fairly well with record earnings up to $1.7 billion in 2008 from 2007. See the chart below for earnings since 2004. The company said it would maintain expected production platinum levels to about 2.4 million ounces in 2009. Despite keeping production leveled with previous years to about 2.4 million ounces, Platinum demand has fallen because of slower consumer spending in this recession period so it is possible to see 2009 revenue dip for Anglo Platinum.


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