By Kevin Krolicki
DETROIT (Reuters) - A new General Motors emerged from bankruptcy protection on Friday, far more quickly than most industry watchers had expected, as a leaner automaker aiming to win back American consumers and pay back taxpayers.
A whirlwind 40-day bankruptcy for GM concluded with the closing of a deal that sold key operations and core brands, including Chevrolet and Cadillac, to a new company that will be majority owned by the U.S. Treasury.
The deal was signed between the government and GM executives at the law firm of Weil, Gotshal & Manges, the company's chief bankruptcy counsel, a source familiar with the company said.
Industry analysts viewed the brevity of the bankruptcy as a positive development.
"I think that this type of case would not do well in a long Chapter 11," said attorney Richard Mikels, head of the bankruptcy practice at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo. "The negatives to the business are reduced significantly by getting these companies out of Chapter 11 as rapidly as possible, and therefore the Chapter 11 process has worked in the manner (it) is supposed to because you have quickly a new entity that is free of the overhang of the old GM."
Chief Executive Fritz Henderson and Ed Whitacre, a veteran telecommunications executive and incoming chairman, were set to appear at a news conference 9:00 a.m. ET at the automaker's Detroit headquarters to mark the launch of the new company.
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 had offered a chance to try to 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 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."
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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.
"I'm still cautiously optimistic -- they still need to put a product out there that everyone is excited about purchasing," said Pete Hastings, senior vice president and fixed-income analyst at Morgan Keegan. "The legacy costs are gone; the challenge in the future is how to approach a marketplace that has been burned by GM."
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 marks 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 the 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.
Both Chrysler and GM hived off their best assets as a means of creating new structures apart from the previous companies that were bankrupt. It will take years to sell off the companies' remaining assets through bankruptcy court proceedings.
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.
(Reporting by Kevin Krolicki; Additional reporting by Caroline Humer and Jui Chakravorty Das; Editing by Patrick Fitzgibbons and Lisa Von Ahn)
