June 2, 2009 (FinancialWire) (By Philip Holmes) — Monday brought the expected but still shocking news that General Motors (NYSE: GM), once the jewel in the U.S. industrial crown, is filing for Chapter 11 protection. It is closing 11 plants, selling off Adam Opel AG (a jewel in its industrial crown) and otherwise making itself a ward of the state.

The New York Times, quoted President Barack Obama as saying the filing marked “the end of an old General Motors and the beginning of a new General Motors,” a reference to how the government plans to help summon a leaner, more competitive company from the ashes of the old.

It’s quite an ash-heap: As the Times reports, “In its bankruptcy petition, G.M. said it had $82.3 billion in assets and $172.8 billion in debts. Its largest creditors were the Wilmington Trust Co., representing a group of bondholders holding $22.8 billion in debts, and affiliates of the United Auto Workers union, representing nearly $20.6 billion in employee obligations.”

When the new GM emerges, Uncle Sam will hold 60% of the company’s stock. The governments of Ontario and Canada will hold 12%, in exchange loaning GM $9.5 billion. As of this writing, GM should still own a minority stake in Opel, but that company’s true masters will be Canadian car parts maker Magna International and a state-owned Russian bank.

As BusinessWeek said, “By the time GM is on its feet, the U.S. government will have loaned it about $50 billion.” The United Auto Workers will have a 17.5% equity stake in the new company, and warrants worth an additional 2.5%. They’ll also hold $2.5 billion in cash and $6.5 billion of preferred stock that pays a $585 million annual dividend.

The union took this tribute as substitute for GM’s $20 billion commitment to the Voluntary Employee Benefits Association, a scheme to offload its health-care plan for workers and retirees.

GM’s bondholders will hold 10% of GM’s stock, plus warrants good for an additional 15% of the company. This in exchange for $27.2 billion of GM debt.

Of course, the new GM will need to have a big market cap once the dust settles, lest all of these reluctant stakeholders feel like the owners of a 1976 Chevette. Both GM’s new management and U.S. Treasury plan to shrink the company’s debt from over $60 billion to around $17 billion. The new company will also save more than $4 billion a year in medical costs via the VEBA offload.

That should fix one side of the balance sheet, but what about selling cars at profit? According to reports, GM seeks to cut as many as one-third of its remaining 54,000 factory workers, and 1,600 of its 4,800 dealers by the end of 2010. This is good for cost reduction, but will GM be able to capitalize on success if it manages to design and engineer market-winning cars and trucks again?

The company will never be what it was, what with half the dealer network it had at peak and its European unit in the control of others. What happens to its engineering talent during such a seismic disruption? What about the company’s much-vaunted sales inroads in the Chinese market, which leveraged its stake in Korea’s Daewoo?

In short, what sort of a company will the government and the UAW be building once the necessary balance sheet repair work is done? Oops, that sounds like the sort of question that answers itself.

The Investrend Economics Calendar lists Weekly Chain Store Sales (8:55 a.m.), Pending Home Sales for Apirl (10 a.m.), Treasury auctions 52-week bills (1 p.m.).

The Investrend Events Calendar showcases  APC RBC Capital Markets Canadian REIT Issuers Conference; BMO Capital Markets 2009 Real Estate Property Tour; CAH Annual Analyst and Investor Day; CHK at Hart Energy Energy Capital Conference; CNQR Credit Suisse Group London Oil and Gas Conference; CSCO, PMCS, VZ, CVX at Primary Global Research Technology Investment: Primary Global Perspectives Conference; EIG, HCC, AGII, NAVG at Oppenheimer & Co. Insurance CEO Summit; GPI, DF, TSN, SAFM at Stephens Spring Investment Conference; INFA Financial Analyst Meeting and Executive Briefing; JACK, CAKE, BKC and WEN at Goldman Sachs Lodging, Gaming, Restaurant & Leisure Conference; MDT Institutional Investor & Analyst Meeting; NXY, BHI, GDP, LNG at RBC Capital Markets Global Energy & Power Conference; STR Semi-annual Equity Analyst Meetings; THC Investor Day; TXN, SUPX, GLW, IMMR at SID/Cowen and Company Display Week Investor Conference; WERN, HWK, KMT, OSK at KeyBanc Capital Markets Industrial, Automotive & Transportation Conference.

The Investrend Money Index is an indicator of the depth of market direction or indirection. While not always including the same stocks, the NYSE/NASDAQ 50 Most Actives indicate the direction in which the mass of money is flowing. Last session’s trading showed 35 advancers versus 15 decliners. Advancers were led by Cell Therapeutics, Inc. (NASDAQ: CTIC) up 46.85%, Delta Petroleum Corporation (NASDAQ: DPTR) up 15.50%, Mgm Mirage (NYSE: MGM) up 12.06%, Us Nat Gas Fd Etf (NYSE: UNG) up 9.25%, Las Vegas Sands Corp (NYSE: LVS) up 8.68%, Ultra Real Estate Pr (NYSE: URE) up 8.11%, Applied Materials, Inc. (NASDAQ: AMAT) up 7.10%, Alcoa, Inc. (NYSE: AA) up 6.62%, Ford Motor Company (NYSE: F) up 6.61%, News Corporation (NASDAQ: NWSA) up 6.34%, Marvell Technology Group, Ltd. (NASDAQ: MRVL) up 6.12%. Decliners followed Ultrashort Real Esta (NYSE: SRS) down 8.38%.

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Today is: National Bubba Day.

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Today in History: The Vandals entered Rome in 455 and plundered the city for two weeks. At what is now Mackinaw City, Michigan, Chippewas captured Fort Michilimackinac in 1763 by diverting the garrison’s attention with a game of lacrosse, then chasing a ball into the fort. P.T. Barnum and his circus began their first tour of the United States in1835. U.S. President Grover Cleveland married Frances Folsom in 1886 in the White House, becoming the only president to wed in the executive mansion. Guglielmo Marconi received a patent for the radio in 1896. Surveyor 1 landed in Oceanus Procellarumon the Moon in 1966, becoming the first US spacecraft to soft land on another world. The CIH computer virus was discovered in Taiwan in 1998.

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