Prospectus Supplement
Table of Contents

FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION NO. 333-158802

PROSPECTUS SUPPLEMENT

to Prospectus dated April 27, 2009

 

General Motors Corporation

 

$27,200,760,650

 

Exchange Offers and Consent Solicitations for any and all of the

Outstanding Notes set forth in the Original Prospectus

 

EACH OF THE EXCHANGE OFFERS WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON MAY 26, 2009, UNLESS EXTENDED BY US. WITH RESPECT TO ANY SERIES OF OLD NOTES, TENDERS MAY NOT BE WITHDRAWN AFTER 11:59 P.M., NEW YORK CITY TIME, ON MAY 26, 2009, EXCEPT IN LIMITED CIRCUMSTANCES AS SET FORTH IN THE ORIGINAL PROSPECTUS.

 

This prospectus supplement amends, modifies and supersedes certain information included in the prospectus dated April 27, 2009 (the “original prospectus”) previously filed with the Securities and Exchange Commission relating to GM’s offer to exchange 225 shares of GM common stock for each 1,000 U.S. dollar equivalent of principal amount (or accreted value as of the settlement date, if applicable) of old notes of each series set forth in the summary offering table on the inside front cover of the original prospectus, resulting in an aggregate offer of up to approximately 6.1 billion new shares of GM common stock, assuming full participation in the exchange offers, upon the terms and subject to the conditions set forth in the original prospectus (as supplemented hereby) and the related letter of transmittal (or form of electronic instruction notice, in the case of old notes held through Euroclear or Clearstream). In respect of the exchange offers for the old GM Nova Scotia notes, GM Nova Scotia is jointly making the exchange offers with GM. Terms used in this prospectus supplement have the same meaning as they do in the original prospectus.

 

This prospectus supplement should be read in conjunction with the original prospectus. Except for the changes described herein, all other terms of the exchange offers remain the same.

 

 

 

Holders of old notes who have already validly tendered their old notes pursuant to the exchange offers and who have not withdrawn such old notes do not need to take any further action to receive the exchange consideration on the settlement date. Holders of old notes who wish to tender but have not yet done so should follow the instructions set forth in “The Exchange Offers and Consent Solicitations—Procedures for Tendering Old Notes” section of the original prospectus.

 

Questions, requests for assistance and requests for additional copies of this prospectus supplement, the original prospectus, letters of transmittal and any other required documents may be directed to the Exchange Agent and Solicitation and Information Agent at its addresses and telephone numbers set forth on the back cover of this prospectus supplement.

 

 

 

See “Risk Factors” beginning on page 36 of the original prospectus and “Item 1A. Risk Factors” beginning on page 99 of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009 (which report is incorporated by reference into the original prospectus) for a discussion of matters that you should consider with respect to the exchange offers and consent solicitations, as well as our Viability Plan and business.

 

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities being offered in exchange for the old notes or this transaction, passed upon the merits or fairness of this transaction or passed upon the adequacy or accuracy of this prospectus supplement or the original prospectus. Any representation to the contrary is a criminal offense.

 

The securities being offered in exchange for the old notes are being offered and will be issued outside the United States only to holders who are “non-U.S. qualified offerees” (as defined in the “Non-U.S. Offer Restrictions” section of the original prospectus). Offers to holders in the United Kingdom, Austria, Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Spain and Switzerland will be made only pursuant to the EU Approved Prospectus, which will incorporate the original prospectus (as supplemented hereby) and will indicate on the front cover thereof that it can be used for such offers. Holders outside of these jurisdictions (and the United States) are authorized to participate in the exchange offers and consent solicitations, as described in the “Non-U.S. Offer Restrictions” section of the original prospectus. In Canada, the exchange offers will only be made to non-US qualified offerees and only pursuant to the Canadian Offering Memorandum dated April 27, 2009, which incorporates the original prospectus (as supplemented hereby). Holders of old notes resident in Canada should contact the Solicitation and Information Agent for a copy of the Canadian Offering Memorandum.

 

 

 

Global Coordinators

 

MORGAN STANLEY   BANC OF AMERICA SECURITIES LLC

 

 

U.S. Lead Dealer Managers   Non-U.S. Lead Dealer Managers
CITI   J.P. MORGAN   BARCLAYS CAPITAL   DEUTSCHE BANK SECURITIES

 

Dealer Managers

 

UBS INVESTMENT BANK

 

WACHOVIA SECURITIES

 

 

 

 

The date of this prospectus supplement is May 19, 2009


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This prospectus supplement includes the following update to the original prospectus:

Update Regarding Discussions with the U.S. Treasury, the UAW and the VEBA-Settlement Class Representative and Satisfaction of Conditions

As disclosed in the original prospectus, the exchange offers are subject to a number of conditions, including (but not limited to) the following:

 

   

the U.S. Treasury Debt Conversion shall have been completed, pursuant to which the U.S. Treasury (or its designee) shall have been issued at least 50% of the pro forma GM common stock in exchange for (a) full satisfaction and cancellation of at least 50% of our outstanding U.S. Treasury Debt at June 1, 2009 (such 50% currently estimated to be approximately $10.0 billion) and (b) full satisfaction and cancellation of our obligations under the warrant issued to the U.S. Treasury, and we shall have used our best efforts to enter into agreements with respect to the foregoing;

 

   

the U.S. Treasury shall have provided commercially reasonable evidence of the U.S. Treasury Financing Commitment and the U.S. Treasury (or its designee) shall have agreed to deliver a binding written consent in respect of a portion of the common stock it is to receive in connection with the U.S. Treasury Debt Conversion authorizing the charter amendments;

 

   

binding agreements in respect of the VEBA Modifications (including judicial and regulatory approval thereof, if any), on such terms as shall be satisfactory to the U.S. Treasury, shall have been executed by all relevant parties, pursuant to which (a) at least 50% (or approximately $10 billion) of the settlement amount will be extinguished in exchange for GM common stock and (b) cash installments will be paid toward the remaining settlement amount over a period of time, which together have a present value equal to the remaining settlement amount, and we shall have used our best efforts to enter into arrangements with respect to the foregoing; and

 

   

binding agreements in respect of the Labor Modifications, on such terms as shall be satisfactory to the U.S. Treasury, shall have been executed by all relevant parties, and we shall have used our best efforts to enter into these agreements.

To date, we have not:

 

   

reached any agreement with the U.S. Treasury in connection with the exchange offers regarding:

 

  o the U.S. Treasury Debt Conversion,

 

  o the U.S. Treasury Financing Commitment,

 

  o a binding written consent in respect of a portion of the common stock it is to receive in connection with the U.S. Treasury Debt Conversion authorizing the charter amendments,

 

  o the percentage of pro forma outstanding GM common stock to be issued to the U.S. Treasury in connection with the U.S. Treasury Debt Conversion, or

 

  o the manner in which the U.S. Treasury (or its designee) will hold any GM common stock received in connection with the U.S. Treasury Debt Conversion and the role (if any) the U.S. Treasury (or its designee) will play in the governance of our company, including, but not limited to, by virtue of its rights associated with the shares of GM common stock it will hold; or

 

   

reached any agreement with the U.S. Treasury, UAW and VEBA-settlement class representative in connection with the exchange offers regarding:

 

  o the VEBA Modifications, or

 

  o the percentage of pro forma outstanding GM common stock to be issued to the New VEBA in connection with the VEBA Modifications; or

 

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reached any agreement with the U.S. Treasury and the UAW in connection with the exchange offers regarding:

 

  o the Labor Modifications.

We previously indicated that we expected to be able to disclose the terms of any agreement reached with respect to the U.S. Treasury Debt Conversion and the VEBA Modifications prior to the withdrawal deadline. However, we currently do not expect to reach an agreement with respect to these matters or the other matters set forth above in connection with the exchange offers, and thereby satisfy the related conditions, prior to May 26, 2009, the scheduled expiration date and withdrawal deadline for the exchange offers. In the event we reach agreement on one or more of the foregoing matters in connection with the exchange offers on or prior to May 26, 2009 (or such later date, if any, to which the exchange offers are extended), we will disclose the terms of these agreements. However, to the extent the specific terms of these agreements satisfy (or are more favorable to holders of old notes than) the terms of the applicable conditions set forth above, and these specific terms do not otherwise constitute a “change in the exchange consideration” or a “material adverse change in our circumstances such that there is a substantial likelihood that a reasonable holder that had previously tendered old notes in the exchange offers would view disclosure of such change as significantly altering the ‘total mix’ of information made available” then we would not be required to extend or reinstate withdrawal rights as described in the prospectus under the heading “The Exchange Offers and Consent Solicitations–Withdrawal of Tenders.” Although withdrawal rights may not be extended or reinstated in this circumstance, holders would continue to have the right to tender old notes until the expiration or termination of the exchange offers. We currently expect on May 27, 2009 to announce whether we will extend the expiration date of the exchange offers or whether the exchange offers have expired and will not be consummated for failure to satisfy one or more of the conditions.

In addition, this prospectus supplement includes changes made to the original prospectus (all of which were previously contained in the prospectus supplement dated May 14, 2009 to the prospectus dated April 27, 2009, which was previously filed with the SEC as part of the registration statement that was declared effective on May 15, 2009) to, among other things:

 

   

update disclosure relating to alternatives we are considering under the U.S. Bankruptcy Code;

 

   

update the list of documents incorporated by reference into the original prospectus;

 

   

provide additional disclosure with respect to the Forbearance, Waiver and Extension provisions relating to tendered old Series D notes;

 

   

update disclosure to reflect recent developments in our business;

 

   

provide additional disclosure with respect to the calculation of the percentage of the pro forma outstanding GM common stock represented by GM common stock to be issued pursuant to the U.S. Treasury Debt Conversion and the VEBA Modifications for the purposes of one of the conditions to the exchange offers;

 

   

update the price range of GM common stock and convertible old notes;

 

   

update disclosure with respect to withdrawal rights;

 

   

revise disclosure with respect to material United States federal income tax considerations;

 

   

update disclosure with respect to experts;

 

   

update historical financial data with respect to our financial condition and results of operations as of and for the years ended December 31, 2008, 2007, 2006, 2005 and 2004 to reflect a retrospective change in the organization and presentation of financial information relative to our reportable segments and to reflect retrospective adoption of SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements—An Amendment of ARB No. 51,” and FSP APB No. 14-1 “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)”; and

 

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provide unaudited historical financial data as of and for the three months ended March 31, 2009 and unaudited pro forma financial data with respect to our financial condition and results of operations as of March 31, 2009 and for the year ended December 31, 2008 and the three months ended March 31, 2009.

Bankruptcy Relief

This section (which begins on the cover page of the original prospectus) is hereby amended and supplemented as follows (additions indicated in underline):

“In the event that we do not receive prior to June 1, 2009 enough tenders of old notes, including the old Series D notes, to consummate the exchange offers, we currently expect to seek relief under the U.S. Bankruptcy Code. This relief may include (i) seeking bankruptcy court approval for the sale of most or substantially all of our assets pursuant to section 363(b) of the U.S. Bankruptcy Code to a new operating company, and a subsequent liquidation of the remaining assets in the bankruptcy case (a “363(b) Sale”); (ii) pursuing a plan of reorganization (where votes for the plan are solicited from certain classes of creditors prior to a bankruptcy filing) that we would seek to confirm (or “cram down”) despite the deemed rejection of the plan by the class of holders of old notes; or (iii) seeking another form of bankruptcy relief, all of which involve uncertainties, potential delays and litigation risks. We are considering these alternatives in consultation with the U.S. Department of the Treasury (the “U.S. Treasury”), our largest lender. We currently believe that if we pursue one of these alternatives, a 363(b) Sale would be the most likely, although we could pursue any of these alternatives.

If we seek bankruptcy relief, holders of old notes may receive consideration that is less than what is being offered in the exchange offers, and it is possible that such holders may receive no consideration at all for their old notes.”

In addition, corresponding language contained in the following sections of the original prospectus is hereby amended and supplemented, in each case in accordance with the additions and deletions indicated above:

 

   

in the first paragraph of the answer to the question “What are the consequences to holders of old notes if we fail to consummate the exchange offers?” (which begins on page x of the original prospectus);

 

   

under the heading “Summary—Summary of the Restructuring—Bankruptcy Relief” (which begins on page 12 of the original prospectus);

 

   

in the first paragraph under the heading “Summary—Summary of the Exchange Offers and Consent Solicitations—Consequences of Failure to Consummate Exchange Offers” (which begins on page 14 of the original prospectus);

 

   

in the second paragraph under the heading “Bankruptcy Relief” (which begins on page 79 of the original prospectus); and

 

   

in the seventh paragraph under the heading “The Exchange Offers and Consent Solicitations—Terms of the Exchange Offers” (which begins on page 102 of the original prospectus).

Incorporation of Certain Documents by Reference

The third sentence of this section (which begins on page i of the original prospectus) is hereby amended and supplemented as follows (additions indicated in underline and deletions indicated in strikethrough):

 

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“We incorporate by reference the documents listed below which have been filed (not furnished) with the SEC and any future reports filed with the SEC by us under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) until the exchange offers are consummated, and such documents form an integral part of this prospectus:

 

GM SEC Filings (File No. 1-43)

  

Filing Date

Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (except with respect to Item 6, Item 7 and Item 8 thereof, which have been replaced in their entirety by the corresponding Items filed in Exhibit 99.a to the Current Report on Form 8-K filed on May 14, 2009)    March 5, 2009
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009    May 8, 2009
Current Reports on Form 8-K and Form 8-K/A   

January 7, 2009, January 23, 2009, February 3, 2009, February 10, 2009, February 18, 2009, February 23, 2009, March 10, 2009, March 18, 2009, March 19, 2009, April 2, 2009 (with respect to Items 1.01, 5.02 and 9.01), and April 24, 2009, April 27, 2009, April 30, 2009, May 5, 2009 and May 14, 2009

Information Statement on Schedule 14C    May 5, 2009
The description of GM common stock set forth in Article Four of GM’s Certificate of Incorporation filed as Exhibit 3(i) to our Annual Report on Form 10-K for the fiscal year ended December 31, 2003    March 11, 2004”

Forbearance, Waiver and Extension with Respect to Old Series D Notes

The answer to the question “What are the old Series D notes forbearance, waiver and extension provisions?” (which begins on page xiv of the original prospectus) is hereby amended and supplemented as follows (additions indicated in underline and deletions indicated in strikethrough):

“By tendering, and not validly withdrawing on or before May 26, 2009 (or any later date that becomes the Attachment Date as described below), their old Series D notes, holders of old Series D notes will irrevocably agree, in the event the exchange offers are extended beyond June 1, 2009, to extend the maturity of their old Series D notes and to forbear from taking any action to enforce, or direct enforcement of, and waive any and all of the rights and remedies available to such holders under such old Series D notes or the indenture governing such old Series D notes (the “Forbearance, Waiver and Extension”), in each case until the Forbearance, Waiver and Extension Termination Date, which is the date of the earlier of (a) the termination of the exchange offers (including in the event GM files a petition for relief under the U.S. Bankruptcy Code) and (b) the consummation of the exchange offers.

At the Forbearance, Waiver and Extension Termination Date, the Forbearance, Waiver and Extension will expire and any and all principal and interest amounts otherwise due under the any old amended Series D notes that remain then outstanding (i.e., any old amended Series D notes not accepted for exchange in the exchange offers) will, in accordance with their terms, become immediately due and payable. The Forbearance, Waiver and Extension will attach to any old Series D notes that have been tendered in the exchange offers and not validly withdrawn on or before May 26, 2009, which is the date set initially as the withdrawal deadline, or such later date as the registration statement of which this prospectus forms a part is declared effective or as GM in its absolute

 

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discretion may determine (the “Attachment Date”). The Attachment Date will also be the expiration and settlement dates for the exchange offer that we are making in which we are offering to exchange amended Series D notes (old Series D notes to which the Forbearance, Waiver and Extension have attached and which will not mature until the Forbearance, Waiver and Extension Termination Date) for old Series D notes. The terms of the old Series D notes that are not tendered in the exchange offers, or are tendered and validly withdrawn on or prior to the Attachment Date, will be unaffected by the Forbearance, Waiver and Extension.

By having tendered, and not having validly withdrawn, their old Series D notes as of on or prior to the Attachment Date, their old Series D notes, such holders shall consent to the attachment of the Forbearance, Waiver and Extension to their old Series D notes, and GM may in its absolute discretion enter into a supplemental indenture as of the Attachment Date or take such other action as it determines is appropriate (including by assigning a temporary or different CUSIP number to such old Series D notes) to evidence the attachment of the Forbearance, Waiver and Extension on the Attachment Date. Any amended Series D notes issued or deemed issued in exchange for old Series D notes will stand in the place of such old Series D notes for purposes of the exchange offer for old Series D notes in which GM common stock is being offered as consideration. All old Series D notes tendered in the exchange offer (and any amended Series D notes issued or deemed issued in place thereof) shall continue to be tendered in the exchange offer unless and until they are validly withdrawn. such holders shall also be deemed to have tendered any amended Series D notes issued, or deemed issued, by GM in order to implement the Forbearance, Waiver and Extension. If a holder of old Series D notes validly withdraws tendered old Series D notes prior to the Attachment Date, then such old Series D notes will not be subject to the Forbearance, Waiver and Extension. However, if a holder of old amended Series D notes validly withdraws its old amended Series D notes at any time following the Attachment Date (in the event withdrawal rights have been extended past or reinstated after the Attachment Date), then such old amended Series D notes, notwithstanding such withdrawal or any subsequent transfer, will continue to be subject to the Forbearance, Waiver and Extension until the Forbearance, Waiver and Extension Termination Date. Any old Series D notes tendered after the Attachment Date (including on or after June 1, 2009) will become immediately subject to the Forbearance, Waiver and Extension.

Our solicitation of the agreement of the holders of old Series D notes to the terms of the Forbearance, Waiver and Extension is an exchange offer in which we are offering to exchange amended Series D notes for old Series D notes. This exchange offer is subject to applicable SEC rules and regulations, including Rule 13e-4 under the Exchange Act. This exchange offer will expire, withdrawal rights with respect to this offer shall terminate, and the settlement date for this offer will occur on, the Attachment Date. This exchange offer is unconditional, and we will settle the exchange of amended Series D notes for old Series D notes (i) promptly following the Attachment Date, in the case of old Series D notes tendered and not validly withdrawn on or prior to the Attachment Date and (ii) promptly following the tender thereof, in the case of any old Series D notes tendered after the Attachment Date.”

In addition, the corresponding language contained in the following sections of the original prospectus is hereby amended and supplemented, in each case in accordance with the additions and deletions indicated above:

 

   

in the last paragraph under the heading “Exchange Offers and Consent Solicitations” (which begins on the cover of the original prospectus);

 

   

in the answer to the question “Can I revoke the tender of my old notes and my consents approving the proposed amendments at any time?” (which begins on page xv of the original prospectus);

 

   

in the second and third sentences under the heading “Summary—Summary of the Restructuring—Forbearance, Waiver and Extension with Respect to Old Series D Notes” (which begins on page 11 of the original prospectus);

 

   

under the heading “Summary—Summary of the Exchange Offers and Consent Solicitations— Forbearance, Waiver and Extension by Holders of Old Series D Notes” (which begins on page 15 of the original prospectus);

 

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in the second paragraph under the heading “Summary—Summary of the Exchange Offers and Consent Solicitations—Withdrawal of Tenders” (which begins on page 18 of the original prospectus);

 

   

in the second sentence under the risk factor heading “In the event that the exchange offers are extended beyond June 1, 2009, but a sufficient principal amount of the old Series D notes has not been tendered in the exchange offers prior to such date, we expect that we would terminate the exchange offers and seek relief under the U.S. Bankruptcy Code” (which begins on page 37 of the original prospectus);

 

   

in the first paragraph under the risk factor heading “If a holder of old Series D notes tenders, and subsequently withdraws, its old Series D notes from the exchange offers after the Attachment Date (in the event withdrawal rights have been extended past or reinstated after the Attachment Date), such withdrawn Series D old notes will remain subject to the Forbearance, Waiver and Extension with respect to such notes unless and until the exchange offers are terminated or consummated (which begins on page 38 of the original prospectus);

 

   

under the heading “The Exchange Offers and Consent Solicitations—Forbearance, Waiver and Extension by Holders of Old Series D Notes” (which begins on page 103 of the original prospectus);

 

   

in the penultimate paragraph under the heading “The Exchange Offers and Consent Solicitations—Withdrawal of Tenders” (which beings on page 110 of the original prospectus); and

 

   

the first paragraph under the heading “Description of Amended Series D Notes” (which begins on page 135 of the original prospectus).

Summary—Recent Developments—Business Updates

The second paragraph of this section (which begins on page 2 of the original prospectus) is hereby amended and supplemented as follows (additions indicated in underline and deletions indicated in strikethrough):

In viewAs a result of the decline in vehicle sales by our dealers in the United States and globally and continuing weak economic conditions generally, we anticipate that we generated substantial negative cash flow from operations during the first quarter of 2009 and that we will reported significantly less net sales and revenues and significantly greater losses than those we experienced during the first quarter of 2008.

Our cash flow from operations in the first quarter of 2009 was $(9.4) billion, as compared to $(1.6) billion in the same period in 2008. Our total net sales and revenue for the first quarter of 2009 was $22.4 billion, down 47% from $42.4 billion in the same period in 2008. We reported a net loss attributable to GM common stockholders of $6.0 billion, or $9.78 per share in the first quarter of 2009. This compares with a reported net loss attributable to GM common stockholders of $3.3 billion, or $5.80 per share, in the same period in 2008.

Summary—Recent Developments—Foreign Restructuring Activities

The second paragraph of this section (which begins on page 3 of the original prospectus) is hereby amended and supplemented as follows (additions indicated in underline and deletions indicated in strikethrough):

Canada. In March 2009, we reached an agreement with the Canadian Auto Workers Union, which we expect will reduce the legacy costs associated with General Motors of Canada Limited’s operations by approximately C$930 million. This agreement is contingent upon our successfully receiving longer term funding from the government of Canada for our Canadian operations. We are currently in advanced discussions with the government of Canada with respect to such funding. Final terms and conditions are still to be determined but we expect to reach an agreement shortly.

On April 29, 2009, General Motors of Canada Limited (“GMCL”) and certain of its subsidiaries entered into a Loan Agreement (the “EDC Loan Agreement”) with Export Development Canada (“EDC”). The EDC Loan

 

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Agreement provides GMCL with up to C$3.0 billion in short term bridge loans to restore liquidity to its business, and to restore stability to the domestic automobile industry in Canada. The loans under the EDC Loan Agreement (the “EDC Loans”) are scheduled to mature on April 28, 2012, unless the maturity date is accelerated. If EDC does not certify the GMCL restructuring plan by June 1, 2009 (the “EDC Certification Deadline”), the maturity date shall be accelerated to the thirtieth day after the EDC Certification Deadline. GMCL borrowed C$500 million under the EDC Loan Agreement on April 30, 2009. GMCL may borrow C$500 million on May 29, 2009 (or such other date, if any, specified by EDC), and thereafter, C$500 million in any calendar month until December 31, 2009, subject to the maximum available EDC Loans of C$3 billion, and GMCL complying with various conditions precedent (including there being no event of default at such time under the EDC Loan Agreement, that GMCL has provided financial reporting to EDC that demonstrates that GMCL has a requirement for such additional EDC Loans, and the maturity date having not been accelerated as a result of EDC not certifying the GMCL final restructuring plan by the EDC Certification Deadline). GMCL is also required to issue a special interest promissory note to EDC equal to 6.67% of the principal amount of each EDC Loan as evidence of GMCL’s obligation to pay additional interest to EDC on such loan. Because the EDC Loan Agreement is considered to be bridge financing and not longer term financing, the receipt of this financial support has not satisfied the condition precedent to the agreement with the Canadian Auto Workers Union described above.

As previously disclosed in the prospectus, our Viability Plan assumes, among other things, that we will receive $5.6 billion in funding from foreign governments. This contemplates $0.8 billion (C$1.0 billion) of funding from the Canadian government, of which $0.4 billion (C$0.5 billion) was received as indicated above from the EDC under the EDC Loan Agreement on April 30, 2009.

Summary—Summary of the Exchange Offers and Consent Solicitations—Conditions to the Exchange Offers

The ninth bulleted condition of this section (which begins on page 20 of the original prospectus) is hereby amended and supplemented as follows (additions indicated in underline):

“the aggregate number of shares of GM common stock issued or agreed to be issued pursuant to the U.S. Treasury Debt Conversion and the VEBA Modifications shall not exceed 89% of the pro forma outstanding GM common stock (assuming full participation by holders of old notes in the exchange offers and calculated based on applicable exchange rates in effect on May 8, 2009);”

In addition, the corresponding language contained in the ninth bulleted condition under the heading “The Exchange Offers and Consent Solicitations—Conditions to the Exchange Offers” (which begins on page 112 of the original prospectus) shall be amended and supplemented in accordance with the additions above.

Risk Factors

In addition to the risk factors contained under the heading “Risk Factors” in the original prospectus (which begin on page 36 of the original prospectus), you should review the risk factors contained under the heading “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009, which report is incorporated by reference into the original prospectus.

 

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Price Range of Common Stock, Convertible Notes and Dividend Policy

This section (which begins on page 63 of the original prospectus) is hereby amended and supplemented to update the last reported sale price of our common stock and the price ranges of our common stock and convertible old notes in the second quarter of 2009 as follows:

 

Common Stock

   High    Low    Dividend

2009

        

Second Quarter (through May 13, 2009)

   $ 2.33    $ 1.00    —  

There were 330,694 holders of record of our common stock as of May 8, 2009.

As of May 13, 2009, the last reported sale price of our common stock on the New York Stock Exchange was $1.21.

 

Convertible Old Notes

   Series A
Convertible
Debentures
   Series B
Convertible
Debentures
   Series C
Convertible
Debentures
   Series D
Convertible
Debentures
     High    Low    High    Low    High    Low    High    Low

Second Quarter (through May 13, 2009)

   3.74    1.49    2.68    1.21    2.75    1.24    8.50    2.60

The Exchange Offers and Consent Solicitations—Withdrawal of Tenders

The fourth and fifth sentences in the first paragraph of this section (which begins on page 110 of the original prospectus) are hereby amended and supplemented as follows (additions indicated in underline and deletions indicated in strikethrough):

“Notwithstanding the foregoing, in connection with the exchange offers for the convertible old notes:

 

   

if there is a change in the exchange consideration being offered in the exchange offers for the convertible old notes, except for an increase in such consideration consisting of such as the offering of additional GM common stock, or

 

   

or if there is a material adverse change in our circumstances such that there is a substantial likelihood that a reasonable holder that had previously tendered convertible old notes in the exchange offers would view disclosure of such change as significantly altering the ‘total mix’ of information made available,

then withdrawal rights will be extended (or reinstated if the withdrawal deadline has passed) to the extent necessary to provide withdrawal rights for a period of at least (10) ten business days after the announcement of such change in the case of the first bullet above, (consistent with the Rule 13e-4(e)(3)(ii) period under the Exchange Act) or five or ten business days after the announcement of such change in the case of the second bullet above (consistent with the Rule 13e-4(e)(3) periods) (depending on the nature of the information), in each case, for those holders of convertible old notes that have previously tendered into the exchange offers. Moreover, we will amend the exchange offer documentation (including this prospectus and the related letter of transmittal) accordingly and issue a press release providing widespread public notice of the extension, and will post this release on our website.”

In addition, this section is hereby amended and supplemented by the addition of the following statement at the end of the last paragraph of such section:

“The tender offers will remain open until all conditions, including regulatory conditions, are satisfied, not satisfied or waived.”

 

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Material United States Federal Income Tax Considerations

The first sentence of the second paragraph of this section (which begins on page 162 of the original prospectus) is hereby amended and supplemented as follows (additions indicated in underline and deletions indicated in strikethrough):

Discussed below are the The discussion below summarizes material U.S. federal income tax consequences of the implementation of the exchange offers and the proposed amendments to holders of old notes and to us and our subsidiaries.”

The first sentence of the fourth paragraph of this section (which begins on page 162 of the original prospectus) is hereby amended and supplemented as follows (additions indicated in underline and deletions indicated in strikethrough):

“This discussion summary does not address foreign, state or local tax consequences of the contemplated transactions, nor does it address the U.S. federal income tax consequences of the transactions to special classes of taxpayers (e.g., small business investment companies, regulated investment companies, real estate investment trusts, controlled foreign corporations, passive foreign investment companies, banks and certain other financial institutions, insurance companies, tax-exempt organizations, retirement plans, holders that are, or hold old notes through, partnerships or other pass-through entities for U.S. federal income tax purposes, U.S. persons whose functional currency is not the U.S. dollar, dealers in securities or foreign currency, traders that mark-to-market their securities, expatriates and former long-term residents of the United States, persons subject to the alternative minimum tax, and persons holding old notes that are a hedge against, or that are hedged against, currency risk or that are part of a straddle, constructive sale or conversion transaction).”

Experts

The first paragraph of this section (which begins on page 181 of the original prospectus) is hereby amended and supplemented as follows (additions indicated in underline and deletions indicated in strikethrough):

“The consolidated financial statements and financial statement schedule of General Motors Corporation for the year ended December 31, 2008 incorporated in this prospectus by reference from our Annual Current Report on Form 10-K for the year ended December 31, 2008, and the report on 8-K filed on May 14, 2009, and the effectiveness of our internal control over financial reporting, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated herein by reference, which reports express (1) an unqualified opinion on the consolidated financial statements and financial statement schedule and includes explanatory paragraphs relating to (a) the existence of substantial doubt about our the Corporation’s ability to continue as a going concern, (b) the fair value measurement of certain assets and liabilities; the recognition and measurement of uncertain tax positions; the change in measurement date for defined benefit plan assets and liabilities; and the recognition of the funded status of our the Corporation’s defined benefit plans, and (c) the sale of a controlling interest in GMAC, (d) the retrospective adjustment of the consolidated financial statements for the January 1, 2009 adoption of new accounting standards requiring retrospective application, and (e) the retrospective adjustment of the consolidated financial statements for a change in our reportable segments, and (2) an adverse opinion on the effectiveness of GM’s internal control over financial reporting because of a material weakness. Such financial statements and financial statement schedule have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.”

 

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Updated Financial Data

The financial information and related discussions set forth in the following sections of the original prospectus are hereby replaced in their entirety with the corresponding sections contained in this prospectus supplement below:

 

   

Summary—Summary Consolidated Historical Financial Data (which begins on page 29 of the original prospectus);

 

   

Summary—Unaudited Pro Forma Condensed Consolidated Financial Data for the Exchange Offers (which begins on page 32 of the original prospectus);

 

   

Ratio of Earnings to Fixed Charges (which begins on page 62 of the original prospectus);

 

   

Capitalization (which begins on page 65 of the original prospectus);

 

   

Selected Consolidated Historical Financial Data (which begins on page 80 of the original prospectus);

 

   

Accounting Treatment of the Exchange Offers (which begins on page 82 of the original prospectus); and

 

   

Unaudited Pro Forma Condensed Consolidated Financial Information for the Exchange Offers (which begins on page 83 of the original prospectus).

 

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SUMMARY

Summary Consolidated Historical Financial Data

The following table sets forth summary consolidated historical financial data as of and for the years ended December 31, 2008, 2007 and 2006 derived from our audited consolidated financial statements. For the years ended December 31, 2005 and 2004, the summary of consolidated historical financial data has been derived from our audited consolidated financial statements adjusted by us to reflect a change in the organization and presentation of financial information relative to our reportable segments and to reflect the retrospective adoption of SFAS No. 160 and FSP APB No. 14-1. The following table also sets forth summary consolidated historical data as of and for the three months ended March 31, 2009 and has been derived from our unaudited condensed consolidated financial statements. The data set forth in the table below should be read together with our audited consolidated financial statements for the years ended December 31, 2008, 2007 and 2006, and the related notes and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” each of which is found in our Current Report on Form 8-K filed on May 14, 2009 and our unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2009, and the related notes and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” each of which is found in our Quarterly Report on Form 10-Q for the three months ended March 31, 2009.

 

      Three
Months
Ended
March 31,
2009
    Years Ended December 31,  
        2008     2007     2006     2005     2004  
     (Dollars in millions except per share amounts)  

Income Statement Data:

            

Total net sales and revenues (a)

   $ 22,431     $ 148,979     $ 179,984     $ 204,467     $ 192,143     $ 192,196  

Operating income (loss)

   $ (5,662 )   $ (21,284 )   $ (4,309 )   $ (5,823 )   $ (16,044 )   $ 9,750  

Income (loss) from continuing operations (b)

   $ (5,899 )   $ (31,051 )   $ (42,685 )   $ (2,155 )   $ (10,625 )   $ 2,446  

Income from discontinued operations (c)

     —         —         256       445       313       286  

Gain from sale of discontinued operations (c)

     —         —         4,293       —         —         —    

Cumulative effect of change in accounting principle (d)

     —         —         —         —         (109 )     —    
                                                

Net income (loss)

     (5,899 )     (31,051 )     (38,136 )     (1,710 )     (10,421 )     2,732  

Less: Net income (loss) attributable to noncontrolling interests

     (76 )     108       (406 )     (324 )     (48 )     (81 )
                                                

Net income (loss) attributable to GM Common Stockholders

   $ (5,975 )   $ (30,943 )   $ (38,542 )   $ (2,034 )   $ (10,469 )   $ 2,651  
                                                

Common stock, $1 2/3 par value common stock:

            

Basic earnings (loss) per share from continuing operations before cumulative effect of accounting change

   $ (9.78 )   $ (53.47 )   $ (76.16 )   $ (4.39 )   $ (18.87 )   $ 4.19  

Basic earnings per share from discontinued operations (c)

     —         —         8.04       0.79       0.55       0.51  

Basic loss per share from cumulative effect of change in account principle (d)

     —         —         —         —         (0.19 )     —    

Basic earnings (loss) per share

   $ (9.78 )   $ (53.47 )   $ (68.12 )   $ (3.60 )   $ (18.51 )   $ 4.70  

Diluted earnings (loss) per share from continuing operations before cumulative effect of accounting change (d)

   $ (9.78 )   $ (53.47 )   $ (76.16 )   $ (4.39 )   $ (18.87 )   $ 4.17  

Diluted earnings (loss) per share from discontinued operations (c)

     —         —         8.04       0.79       0.55       0.51  

Diluted loss per share from cumulative effect of accounting change (d)

                             (0.19 )      

Diluted earnings (loss) per share

   $ (9.78 )   $ (53.47 )   $ (68.12 )   $ (3.60 )   $ (18.51 )   $ 4.68  

Cash dividends declared per share

   $ —       $ 0.50     $ 1.00     $ 1.00     $ 2.00     $ 2.00  

Book value per share (h)

   $ (148.27 )          

Balance Sheet Data (as of period end):

            

Current assets

   $ 36,776     $ 43,595     $ 64,651     $ 69,427     $ 52,357     $ 53,371  

Noncurrent assets

   $ 45,514     $ 47,444     $ 84,195     $ 116,568     $ 109,637     $ 106,847  

Total assets (a) (b) (e)

   $ 82,290     $ 91,039     $ 148,846     $ 185,995     $ 473,938     $ 480,421  

Current liabilities

   $ 80,798     $ 75,608     $ 73,845     $ 73,154     $ 70,726     $ 72,849  

Noncurrent liabilities

   $ 92,012     $ 100,507     $ 110,153     $ 116,917     $ 92,776     $ 79,009  

Equity (deficit) (b) (d) (f) (g)

   $ (90,520 )   $ (85,076 )   $ (35,152 )   $ (4,076 )   $ 15,931     $ 28,560  

Noncontrolling interests

   $ 622     $ 484     $ 1,218     $ 1,190     $ 1,047     $ 397  

 

Certain prior period amounts have been reclassified in the consolidated statements of operations to conform to the 2008 presentation.

 

(a) In November 2006, we sold a 51% controlling ownership interest in GMAC, resulting in a significant decrease in total consolidated net sales and revenues, assets and notes and loans payable.

 

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(b) In September 2007, we recorded full valuation allowances of $39.0 billion against our net deferred tax assets in Canada, Germany and the United States.

 

(c) In August 2007, we completed the sale of the commercial and military operations of our Allison Transmission business (“Allison”). The results of operations, cash flows and the 2007 gain on sale of Allison have been reported as discontinued operations for all periods presented.

 

(d) At December 31, 2005, we recorded an asset retirement obligation of $181 million in accordance with the requirements of Financial Accounting Standards Board (FASB) Interpretation No. (FIN) 47, “Accounting for Conditional Asset Retirement Obligations—an Interpretation of FASB Statement No. 143.” The cumulative effect on net loss, net of related income tax effects, of recording the asset retirement obligations was $109 million or $0.19 per share on a diluted basis.

 

(e) At December 31, 2006, we recognized the funded status of our benefit plans on our consolidated balance sheet with an offsetting adjustment to Accumulated other comprehensive income (loss) in stockholders’ equity (deficit) of $16.9 billion in accordance with the adoption of SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment to FASB Statements No. 87, 88, 106, and 132(R)” (SFAS No. 158).

 

(f) At January 1, 2007, we recorded a decrease to retained earnings of $425 million and an increase of $1.2 billion to Accumulated other comprehensive income in connection with the early adoption of the measurement provisions of SFAS No. 158.

 

(g) At January 1, 2007, we recorded an increase to retained earnings of $137 million with a corresponding decrease to our liability for uncertain tax positions in accordance with FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109.”

 

(h) Book value per share is calculated by dividing Deficit by the number of common shares outstanding.

The following table presents the ratio of our earnings to fixed charges for the periods indicated:

 

     Three months
ended
March 31,

2009
   Twelve months ended December 31, (3)
        2008    2007    2006    2005    2004

Actual (1)

   —      —      —      0.69    —      1.05

Pro Forma (2)

   —      —              

 

(1) Earnings for the years ended December 31, 2008, 2007 and 2005 and the three months ended March 31, 2009 were inadequate to cover fixed charges. Additional earnings of $29.2 billion for 2008, $5.6 billion for 2007, $16.6 billion for 2005 and $6.0 billion for the three months ended March 31, 2009 would have been necessary to bring the respective ratios to 1.0.

 

(2) Pro forma earnings for the year ended December 31, 2008 and the three months ended March 31, 2009, after giving effect to the pro forma adjustments described under “Unaudited Pro Forma Condensed Consolidated Financial Information for the Exchange Offers” included elsewhere in this prospectus, were inadequate to cover fixed charges. Additional earnings of $28.0 billion for 2008 and $5.3 billion for the three months ended March 31, 2009 would be necessary to bring the respective ratios to 1.0.

 

(3) The ratios of earnings to fixed charges for the years ended December 31, 2008, 2007, 2006, 2005 and 2004 have been adjusted for the retrospective adoption of FSP APB No. 14-1.

 

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Consolidated Balance Sheet as of December 31, 2006

The following table sets forth GM’s consolidated balance sheet as of December 31, 2006 which has been derived from our audited consolidated financial statements as presented in our Annual Report on Form 10-K for the year ended December 31, 2007, adjusted by us to reflect a change in the organization and presentation of financial information relative to our reportable segments and to reflect the retrospective adoption of SFAS No. 160 and FSP APB No. 14-1. The balance sheet set forth in the table below should be read together with our audited consolidated financial statements for the years ended December 31, 2008, 2007 and 2006 and the related notes, and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” each of which is found in our current report on Form 8-K filed on May 14, 2009.

 

     December 31, 2006  
     (Dollars in millions)  

ASSETS

 

Current Assets

  

Cash and cash equivalents

   $ 24,123  

Marketable securities

     326  
        

Total cash and marketable securities

     24,449  

Accounts and notes receivable, net

     8,844  

Inventories

     14,106  

Equipment on operating leases, net

     9,041  

Other current assets and deferred income taxes

     12,987  
        

Total current assets

     69,427  

Non-Current Assets

  

Equity in net assets of nonconsolidated affiliates

     9,492  

Property, net

     41,942  

Goodwill and intangible assets, net

     1,118  

Deferred income taxes

     31,494  

Prepaid pension

     17,366  

Equipment on operating leases, net

     8,878  

Other assets

     6,278  
        

Total non-current assets

     116,568  
        

Total assets

   $ 185,995  
        

LIABILITIES AND EQUITY (DEFICIT)

 

Current Liabilities

  

Accounts payable (principally trade)

   $ 27,121  

Short-term debt and current portion of long-term debt

     10,197  

Accrued expenses

     35,836  
        

Total current liabilities

     73,154  

Non-Current Liabilities

  

Long-term debt

     37,279  

Postretirement benefits other than pensions

     50,409  

Pensions

     11,934  

Other liabilities and deferred income taxes

     17,295  
        

Total non-current liabilities

     116,917  
        

Total liabilities

     190,071  

Equity (Deficit)

  

Preferred stock, no par value, authorized 6,000,000, no shares issued and outstanding

     —    

Common stock $1 2/3 par value (2,000,000,000 shares authorized, 756,637,541 and 566,059,249 shares issued and outstanding at December 31, 2007, respectively, and 756,637,541 and 565,670,254 shares issued and outstanding at December 31, 2006, respectively)

     943  

Capital surplus (principally additional paid-in capital)

     15,946  

Accumulated deficit

     (29 )

Accumulated other comprehensive loss

     (22,126 )
        

Total GM stockholders’ deficit

     (5,266 )

Noncontrolling interests

     1,190  
        

Total deficit

     (4,076 )
        

Total liabilities and deficit

   $ 185,995  
        

 

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SUMMARY

Unaudited Pro Forma Condensed Consolidated Financial Data for the Exchange Offers

The following table sets forth unaudited pro forma condensed consolidated financial data for the exchange offers as of and for the three months ended March 31, 2009 and for the year ended December 31, 2008. The data set forth in the table below has been derived by applying the pro forma adjustments described under “Unaudited Pro Forma Condensed Consolidated Financial Information for the Exchange Offers,” included elsewhere in this prospectus, to our historical consolidated financial statements as of and for the three months ended March 31, 2009 and for the year ended December 31, 2008, which are incorporated into this prospectus by reference from our quarterly report on Form 10-Q for the three months ended March 31, 2009 and our current report on Form 8-K filed on May 14, 2009 for the year ended December 31, 2008.

The unaudited pro forma condensed consolidated financial information for the exchange offers assumes that each of the adjustments below that are directly attributable to the exchange offers and factually supportable had occurred as of March 31, 2009 for the unaudited pro forma condensed consolidated balance sheet, and as of the beginning of the period for the unaudited pro forma condensed consolidated statements of operations:

 

   

consummation of the transactions contemplated by the exchange offers, including the payment of related fees and expenses;

 

   

the U.S. Treasury Debt Conversion;

 

   

the VEBA Modifications;

 

   

additional working capital loans under the First U.S. Treasury Loan Agreement that occurred subsequent to March 31, 2009;

 

   

par value reduction of GM common stock to $0.01 per share;

 

   

increase in the number of authorized shares of GM common stock; and

 

   

1-for-100 reverse stock split of GM common stock.

In addition to the adjustments above, the unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2009 and for the year ended December 31, 2008 assume that the following adjustments that are directly attributable to the exchange offers and factually supportable had occurred as of the beginning of the period:

 

   

all borrowings under the First U.S. Treasury Loan Agreement and borrowings under the Second U.S. Treasury Loan Agreement that occurred prior to March 31, 2009; and

 

   

our purchase of an additional ownership interest in GMAC that occurred during the three months ended March 31, 2009.

The unaudited pro forma condensed consolidated financial data for the exchange offers also gives effect to the following adjustments that represent events that had or will have a material effect on our financial statements and capital structure:

 

   

modifications to the terms of certain secured borrowing facilities that occurred during the three months ended March 31, 2009 (reflected as adjustments to the unaudited pro forma condensed consolidated statements of operations only, as if they occurred as of the beginning of the period);

 

   

borrowings under the EDC Loan Agreement that occurred subsequent to March 31, 2009;

 

   

assumed borrowings under the Receivables Program arising subsequent to March 31, 2009; and

 

   

settlement of certain derivative contracts that occurred subsequent to March 31, 2009 (reflected as an adjustment to the unaudited pro forma condensed consolidated balance sheet only).

The exchange offers, U.S. Treasury Debt Conversion and VEBA Modifications will result in significant dilution to our current common stockholders.

 

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The unaudited pro forma condensed consolidated financial data for the exchange offers is based on assumptions that we believe are reasonable and should be read in conjunction with “Capitalization,” “Accounting Treatment of the Exchange Offers,” and “Unaudited Pro Forma Condensed Consolidated Financial Information for the Exchange Offers,” included elsewhere in this prospectus, and our consolidated financial statements and related notes thereto as of and for the three months ended March 31, 2009 and for the year ended December 31, 2008, which are incorporated into this prospectus by reference from our quarterly report on Form 10-Q for the three months ended March 31, 2009 and our current report on Form 8-K filed on May 14, 2009 for the year ended December 31, 2008. The unaudited pro forma condensed consolidated financial data also assumes, among other things, that we would issue at least 50% of our pro forma GM common stock to the U.S. Treasury (or its designee) in exchange for (a) full satisfaction and cancellation of at least 50% of our outstanding U.S. Treasury Debt at June 1, 2009 (such 50% currently estimated to be approximately $10 billion, which contemplates $2.6 billion of additional borrowings that are not reflected in the pro forma balance sheet because the U.S. Treasury has not yet agreed to advance the funds) and (b) full satisfaction and cancellation of our obligations under the warrant issued to the U.S. Treasury. Additionally, the unaudited pro forma condensed consolidated financial data assumes that the VEBA Modifications would provide, among other things, for the issuance of shares of GM common stock to the New VEBA in full satisfaction of at least $10 billion of our obligations under the VEBA settlement agreement. The aggregate number of shares of GM common stock issued or agreed to be issued pursuant to the U.S. Treasury Debt Conversion and the VEBA Modifications shall not exceed 89% of the pro forma GM common stock (assuming full participation by holders of old notes in the exchange offers and after issuance of shares to the New VEBA). The exchange offers, U.S. Treasury Debt Conversion and VEBA Modifications will result in significant dilution to our current common stockholders, and will result in pro forma ownership levels of approximately 1.0%, assuming the Assumed Participation Level in the exchange offers and after the shares are issued to the New VEBA. The actual number of shares of GM common stock issued or agreed to be issued under the U.S. Treasury Debt Conversion and the VEBA Modifications could be different than the levels assumed in the unaudited pro forma condensed consolidated financial data, and such differences could be material.

The unaudited pro forma condensed consolidated financial data for the exchange offers assumes, among other things, the satisfaction of the U.S. Treasury Condition, which we currently believe will require that at least 90% of the aggregate principal amount (or, in the case of discount notes, accreted value) of our outstanding old notes (including at least 90% of the aggregate principal amount of the old Series D notes) be tendered in the exchange offers or called for redemption pursuant to the call option (in the case of the non-USD old notes). As consideration for the old notes, the tendering holders will receive 225 shares of GM common stock for each 1,000 U.S. dollar equivalent of principal amount (or accreted value as of the settlement date, if applicable) of old notes exchanged. Whether this level of participation in the exchange offers will be required (or sufficient) to satisfy the U.S. Treasury Condition will ultimately be determined by the U.S. Treasury. The actual exchange of our old notes could be more or less than the level of participation assumed for the exchange offers, which would impact the pro forma total debt and pro forma stockholders’ deficit as of March 31, 2009, and would impact the pro forma interest expense and pro forma loss per share for the three months ended March 31, 2009 and for the year ended December 31, 2008.

The unaudited pro forma condensed consolidated financial data for the exchange offers does not give effect to the Labor Modifications or the restructuring (including the reduction in U.S. dealers and brands) and other actions contemplated in our current Viability Plan because such actions do not currently meet the requirements for pro forma presentation under Article 11 of Regulation S-X. Although management expects that the Labor Modifications will result in cost savings and the actions undertaken pursuant to our current Viability Plan will result in near-term restructuring and impairment charges and in improved financial performance in the future, no assurance can be given that these anticipated cost savings or projected operational and financial improvements will be realized.

The unaudited pro forma condensed consolidated financial data for the exchange offers is presented for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that

 

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would have actually been reported had the exchange offers and other pro forma events been consummated as of March 31, 2009 for purposes of our balance sheet data or as of the beginning of the period for purposes of our statements of operations data for the three months ended March 31, 2009 and for the year ended December 31, 2008, nor is it necessarily indicative of our future financial position or results of operations. The actual effects of the exchange offers and other pro forma events on our financial position or results of operations may be different than what we have assumed or estimated, and these differences may be material.

 

     For the year ended
December 31, 2008
    For the year
ended
December 31,
2008 Pro Forma
    As of and for
the Three Months
Ended

March 31, 2009
    As of and for the
Three Months Ended
March 31, 2009

Pro Forma
 
(Dollars in millions, except per share amounts)          (Unaudited)     (Unaudited)     (Unaudited)  

Statements of Operations Data (for the year ended December 31, 2008 and for the three months ended March 31, 2009):

        

Total net sales and revenues

   $ 148,979     $ 148,979     $ 22,431     $ 22,431  

Net loss attributable to GM Common Stockholders

     (30,943 )     (29,711 )     (5,975 )     (5,263 )

Net loss per share attributable to GM Common Stockholders (before giving effect to the 1-for-100 reverse stock split)

     (53.47 )     (0.80 )     (9.78 )     (0.14 )

Net loss per share attributable to GM Common Stockholders (after giving effect to the 1-for-100 reverse stock split)

     (5,362.87 )     (79.65 )     (966.25 )     (14.11 )

Balance Sheet Data (as of March 31, 2009):

        

Total assets

     N/A       N/A     $ 82,290     $ 83,047  

Total debt (a)

     N/A       N/A       54,402       25,459  

Postretirement benefits other than pensions

     N/A       N/A       22,503       22,261  

Total liabilities

     N/A       N/A       172,810       142,063  

Deficit

     N/A       N/A       (90,520 )     (59,016 )

 

(a) Total debt is comprised of Short-term borrowings and current portion of Long-term debt, U.S. Treasury Debt and Long-term debt.

Assuming a maximum level of participation where 100% of old notes are tendered pursuant to the exchange offers or redeemed pursuant to the call option (in the case of the non-USD old notes), the incremental increase in the level of participation from 90% to 100% would decrease pro forma interest expense by $52 million and $210 million for the three months ended March 31, 2009 and for the year ended December 31, 2008, respectively. The increase in the level of participation would also decrease pro forma loss from continuing operations per share by $0.00 and $0.01 for the three months ended March 31, 2009 and for the year ended December 31, 2008, respectively, before the reverse stock split and $0.15 and $0.56 after the reverse stock split, respectively. The increase in the level of participation to 100% would also decrease total pro forma debt and pro forma stockholders’ deficit by $2.6 billion as of March 31, 2009.

The following table sets forth an unaudited pro forma sensitivity analysis for the exchange offers as of March 31, 2009 to estimate the effect of changes in the percentage of holders electing to tender their old notes and to estimate the effect of changes in the estimated fair value per share of GM common stock given to tendering holders as part of the exchange consideration. The estimates presented in this unaudited pro forma sensitivity analysis may differ from actual results, and these differences may be material. When equity

 

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consideration is granted in full settlement of debt, as is provided for under the exchange offers, Statement of Financial Accounting Standards No. 15, “Accounting by Debtors and Creditors for Troubled Debt Restructurings” (“SFAS No. 15”), requires a gain to be recognized if the carrying value of the old notes tendered under the exchange offers is greater than the fair value of the GM common stock issued in exchange for the old notes. In the table below, any pro forma gain we would realize is reflected in accumulated deficit on the unaudited pro forma condensed consolidated balance sheet for the exchange offers, and is excluded from the unaudited pro forma condensed consolidated statements of operations for the exchange offers since this gain on restructuring is not expected to have a continuing impact on us.

 

     Assuming 90% Aggregate Tender
or Redemption of Old Notes,
Pro Forma Impact on: *
    Assuming 100% Tender
of Old Notes,
Pro Forma Impact on: *
 

Estimated fair value of equity per share
(assumed share price, before giving effect to

the 1-for-100 reverse stock split)

   Common
stock and
capital
surplus
   Accumulated
deficit,
arising from
gain
    Total debt     Common
stock and
capital
surplus
   Accumulated
deficit,
arising from
gain
    Total debt  
(Dollars in millions, except share price)                                   

$1.00

   $   5,484    $   (17,838 )   $   (23,785 )   $   6,094    $   (19,846 )   $   (26,428 )

$0.75

     4,113      (19,209 )     (23,785 )     4,570      (21,370 )     (26,428 )

$0.50

     2,742      (20,580 )     (23,785 )     3,047      (22,893 )     (26,428 )

$0.42

     2,304      (21,018 )     (23,785 )     2,559      (23,381 )     (26,428 )

$0.25

     1,371      (21,951 )     (23,785 )     1,523      (24,417 )     (26,428 )

$0.10

     548      (22,774 )     (23,785 )     609      (25,331 )     (26,428 )

$0.00

     —        (23,322 )     (23,785 )     —        (25,940 )     (26,428 )

 

* The table above does not include the balance sheet accounts of cash or other assets that will be reduced for the estimated costs of the exchange offers of $240 million and the decrease in debt issuance costs of $223 million at the Assumed Participation Level and $248 million at the 100% participation level in the exchange offers.

The exchange offers are conditioned on, among other things, the requirement that the results of the exchange offers shall be satisfactory to the U.S. Treasury, which we currently believe will require that at least 90% of the aggregate principal amount (or, in the case of discount notes, accreted value) of our outstanding old notes (including at least 90% of the aggregate principal amount of the old Series D notes) be tendered in the exchange offers or called for redemption pursuant to the call option (in the case of the non-USD old notes) (the “U.S. Treasury Condition”). Whether this level of participation in the exchange offers will be required (or sufficient) to satisfy the U.S. Treasury Condition will ultimately be determined by the U.S. Treasury. The actual level of participation in the exchange offers may be different than what we have assumed, and this difference may be material.

The assumptions we used to estimate the fair value of the GM common stock given to tendering holders as part of the exchange consideration, including an unaudited pro forma sensitivity analysis associated with this estimate, are described further under “Unaudited Pro Forma Condensed Consolidated Financial Information for the Exchange Offers,” included elsewhere in this prospectus.

In the event we have not received prior to June 1, 2009 sufficient tenders of old notes, including the old Series D notes, to consummate the exchange offers, we currently expect to seek relief under the U.S. Bankruptcy Code. This relief may include (i) seeking bankruptcy court approval for the sale of most or substantially all of our assets pursuant to section 363(b) of the U.S. Bankruptcy Code to a new operating company, and a subsequent liquidation of the remaining assets in the bankruptcy case; (ii) pursuing a plan of reorganization (where votes for the plan are solicited from certain classes of creditors prior to a bankruptcy filing) that we would seek to confirm (or “cram down”) despite the deemed rejection of the plan by the class of holders of old notes; or (iii) seeking another form of bankruptcy relief, all of which involve uncertainties, potential delays and litigation risks. We are considering these alternatives in consultation with the U.S. Treasury, our largest lender. We currently believe that

 

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if we pursue one of these alternatives, a 363(b) Sale would be the most likely, although we could pursue any of these alternatives. If we seek bankruptcy relief, holders of old notes may receive consideration that is less than what is being offered in the exchange offers, and it is possible that such holders may receive no consideration at all for their old notes.

 

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RATIO OF EARNINGS TO FIXED CHARGES

The following table presents the ratio of our earnings to fixed charges for the periods indicated:

 

     Three months
ended
March 31,

2009
   Twelve months ended December 31,(3)
        2008    2007    2006    2005    2004

Actual (1)

   —      —      —      0.69    —      1.05

Pro Forma (2)

   —      —              

 

(1) Earnings for the years ended December 31, 2008, 2007 and 2005 and the three months ended March 31, 2009 were inadequate to cover fixed charges. Additional earnings of $29.2 billion for 2008, $5.6 billion for 2007, $16.6 billion for 2005 and $6.0 billion for the three months ended March 31, 2009 would have been necessary to bring the respective ratios to 1.0.

 

(2) Pro forma earnings for the year ended December 31, 2008 and the three months ended March 31, 2009, after giving effect to the pro forma adjustments described under “Unaudited Pro Forma Condensed Consolidated Financial Information for the Exchange Offers” included elsewhere in this prospectus, were inadequate to cover fixed charges. Additional earnings of $28.0 billion for 2008 and $5.3 billion for the three months ended March 31, 2009 would be necessary to bring the respective ratios to 1.0.

 

(3) The ratios of earnings to fixed charges for the years ended December 31, 2008, 2007, 2006, 2005 and 2004 have been adjusted for the retrospective adoption of FSP APB No. 14-1.

 

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CAPITALIZATION

The following table sets forth our capitalization, as of March 31, 2009, on a historical and pro forma basis to reflect the completion of the exchange offers, assuming the satisfaction of the U.S. Treasury Condition, which we currently believe will require that at least of 90% of the aggregate principal amount (or, in the case of discount notes, accreted value) of our outstanding old notes (including at least 90% of the aggregate principal amount of the outstanding Series D notes) be tendered in the exchange offers or called for redemption pursuant to the call option (in the case of the non-USD old notes). As consideration for the old notes, the tendering holders will receive 225 shares of GM common stock for each 1,000 U.S. dollar equivalent of principal amount (or accreted value as of the settlement date, if applicable) of old notes exchanged. These pro forma adjustments to our capitalization assume and give effect to the consummation of the exchange offers, the payment of related fees and expenses, the U.S. Treasury Debt Conversion, the VEBA Modifications, additional working capital loans under the First U.S. Treasury Loan Agreement that occurred subsequent to March 31, 2009, assumed borrowings under the Receivables Program arising subsequent to March 31, 2009, borrowings under the EDC Loan Agreement that occurred subsequent to March 31, 2009, the settlement of certain derivative contracts that occurred subsequent to March 31, 2009, the par value reduction of GM common stock to $0.01 per share, the increase in the number of authorized shares of GM common stock, and the 1-for-100 reverse stock split of GM common stock, as if each of these adjustments had occurred at March 31, 2009.

The U.S. Treasury Debt Conversion and VEBA Modifications will result in significant dilution to our current common stockholders, and will result in pro forma ownership levels of approximately 1.0% and 9.1% for existing stockholders and tendering holders, respectively, assuming the Assumed Participation Level in the exchange offers and after shares are issued to the New VEBA. The actual effects of the U.S. Treasury Debt Conversion and satisfaction of the VEBA obligations in exchange for GM common stock on our financial position and results of operations could be different than the levels assumed for the unaudited pro forma condensed consolidated financial information for the exchange offers, and such amounts could be material.

The pro forma information set forth in the table below has been derived by applying the pro forma adjustments described under “Unaudited Pro Forma Condensed Consolidated Financial Information for the Exchange Offers” to our historical consolidated financial statements as of and for the three months ended March 31, 2009, which are incorporated into this prospectus by reference from our quarterly report on Form 10-Q for the three months ended March 31, 2009. You should read this table in conjunction with information set forth under “Unaudited Pro Forma Condensed Consolidated Financial Data for the Exchange Offers,” included elsewhere in this prospectus, and our condensed consolidated financial statements and related notes thereto as of and for the three months ended March 31, 2009, which are incorporated into this prospectus by reference from our quarterly report on Form 10-Q for the three months ended March 31, 2009.

 

     As of March 31, 2009  
     Historical     Pro Forma  

(Dollars in millions)

   (Unaudited)     (Unaudited)  

Total Cash and cash equivalents

   $     11,448     $     12,588  
                

Short-term borrowings and current portion of long-term debt, excluding U.S. Treasury Debt

   $ 11,101     $ 10,582  

U.S. Treasury Debt

     14,455       8,928  

Long-term debt

     28,846       5,949  

Deficit

     (90,520 )     (59,016 )
                

Total capitalization

   $ (36,118 )   $ (33,557 )
                

The unaudited pro forma condensed consolidated financial information for the exchange offers does not give effect to the Labor Modifications or the restructuring (including the reduction in U.S. dealers and brands) and other actions (described further under “The Restructuring—Viability Plan”) contemplated in our current Viability Plan because such actions do not currently meet the requirements for pro forma presentation under Article 11 of Regulation S-X. Although management expects that the Labor Modifications will result in cost savings and the actions undertaken pursuant to our current Viability Plan will result in near-term restructuring and impairment charges and in improved financial performance in the future, no assurance can be given that these anticipated cost savings or projected operational and financial improvements will be realized.

 

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Selected Consolidated Historical Financial Data

The following table sets forth summary consolidated historical financial data as of and for the years ended December 31, 2008, 2007 and 2006 derived from our audited consolidated financial statements. For the years ended December 31, 2005 and 2004, the summary of consolidated historical financial data has been derived from our audited consolidated financial statements adjusted by us to reflect a change in the organization and presentation of financial information relative to our reportable segments and to reflect the retrospective adoption of SFAS No. 160 and FSP APB No. 14-1. The following table also sets forth summary consolidated historical data as of and for the three months ended March 31, 2009 and has been derived from our unaudited condensed consolidated financial statements. The data set forth in the table below should be read together with our audited consolidated financial statements for the years ended December 31, 2008, 2007 and 2006, and the related notes and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” each of which is found in our Current Report on Form 8-K filed on May 14, 2009 and our unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2009, and the related notes and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” each of which is found in our Quarterly Report on Form 10-Q for the three months ended March 31, 2009.

 

    Three
Months
Ended

March 31,
2009
    Years Ended December 31,  
      2008     2007     2006     2005     2004  
    (Dollars in millions except per share amounts)  

Income Statement Data:

           

Total net sales and revenues (a)

  $ 22,431     $ 148,979     $ 179,984     $ 204,467     $ 192,143     $ 192,196  

Operating income (loss)

  $ (5,662 )   $ (21,284 )   $ (4,309 )   $ (5,823 )   $ (16,044 )   $ 9,750  

Income (loss) from continuing operations (b)

  $ (5,899 )   $ (31,051 )   $ (42,685 )   $ (2,155 )   $ (10,625 )   $ 2,446  

Income from discontinued operations (c)

    —         —         256       445       313       286  

Gain from sale of discontinued operations (c)

    —         —         4,293       —         —         —    

Cumulative effect of change in accounting principle (d)

    —         —         —         —         (109 )     —    
                                               

Net income (loss)

    (5,899 )     (31,051 )     (38,136 )     (1,710 )     (10,421 )     2,732  

Less: Net income attributable to noncontrolling interests

    (76 )     108       (406 )     (324 )     (48 )     (81 )
                                               

Net income (loss) attributable to GM Common Stockholders

  $ (5,975 )   $ (30,943 )   $ (38,542 )   $ (2,034 )   $ (10,469 )   $ 2,651  
                                               

Common stock, $1 2/3 par value common stock:

           

Basic earnings (loss) per share from continuing operations before cumulative effect of accounting change

  $ (9.78 )   $ (53.47 )   $ (76.16 )   $ (4.39 )   $ (18.87 )   $ 4.19  

Basic earnings per share from discontinued operations (c)

    —         —         8.04       0.79       0.55       0.51  

Basic loss per share from cumulative effect of change in account principle (d)

    —         —         —         —         (0.19 )     —    

Basic earnings (loss) per share

  $ (9.78 )   $ (53.47 )   $ (68.12 )   $ (3.60 )   $ (18.51 )   $ 4.70  

Diluted earnings (loss) per share from continuing operations before cumulative effect of accounting change (d)

  $ (9.78 )   $ (53.47 )   $ (76.16 )   $ (4.39 )   $ (18.87 )   $ 4.17  

Diluted earnings (loss) per share from discontinued operations (c)

    —         —         8.04       0.79       0.55       0.51  

Diluted loss per share from cumulative effect of accounting change (d)

    —         —         —         —         (0.19 )     —    

Diluted earnings (loss) per share

  $ (9.78 )   $ (53.47 )   $ (68.12 )   $ (3.60 )   $ (18.51 )   $ 4.68  

Cash dividends declared per share

  $ —       $ 0.50     $ 1.00     $ 1.00     $ 2.00     $ 2.00  

Book value per share (h)

  $ (148.27 )          

Balance Sheet Data (as of period end):

           

Current assets

  $ 36,776     $ 43,595     $ 64,651     $ 69,427     $ 52,357     $ 53,371  

Noncurrent assets

  $ 45,514     $ 47,444     $ 84,195     $ 116,568     $ 109,637     $ 106,847  

Total assets (a) (b) (e)

  $ 82,290     $ 91,039     $ 148,846     $ 185,995     $ 473,938     $ 480,421  

Current liabilities

  $ 80,798     $ 75,608     $ 73,845     $ 73,154     $ 70,726     $ 72,849  

Noncurrent liabilities

  $ 92,012     $ 100,507     $ 110,153     $ 116,917     $ 92,776     $ 79,009  

Equity (deficit) (b) (d) (f) (g)

  $ (90,520 )   $ (85,076 )   $ (35,152 )   $ (4,076 )   $ 15,931     $ 28,560  

Noncontrolling interests

  $ 622     $ 484     $ 1,218     $ 1,190     $ 1,047     $ 397  

 

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Certain prior period amounts have been reclassified in the consolidated statements of operations to conform to the 2008 presentation.

 

(a) In November 2006, we sold a 51% controlling ownership interest in GMAC, resulting in a significant decrease in total consolidated net sales and revenues, assets and notes and loans payable.

 

(b) In September 2007, we recorded full valuation allowances of $39.0 billion against our net deferred tax assets in Canada, Germany and the United States.

 

(c) In August 2007, we completed the sale of the commercial and military operations of our Allison Transmission business (“Allison”). The results of operations, cash flows and the 2007 gain on sale of Allison have been reported as discontinued operations for all periods presented.

 

(d) At December 31, 2005, we recorded an asset retirement obligation of $181 million in accordance with the requirements of Financial Accounting Standards Board (FASB) Interpretation No. (FIN) 47, “Accounting for Conditional Asset Retirement Obligations—an Interpretation of FASB Statement No. 143.” The cumulative effect on net loss, net of related income tax effects, of recording the asset retirement obligations was $109 million or $0.19 per share on a diluted basis.

 

(e) At December 31, 2006, we recognized the funded status of our benefit plans on our consolidated balance sheet with an offsetting adjustment to Accumulated other comprehensive income (loss) in stockholders’ equity (deficit) of $16.9 billion in accordance with the adoption of SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment to FASB Statements No. 87, 88, 106, and 132(R)” (SFAS No. 158).

 

(f) At January 1, 2007, we recorded a decrease to retained earnings of $425 million and an increase of $1.2 billion to Accumulated other comprehensive income in connection with the early adoption of the measurement provisions of SFAS No. 158.

 

(g) At January 1, 2007, we recorded an increase to retained earnings of $137 million with a corresponding decrease to our liability for uncertain tax positions in accordance with FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109.”

 

(h) Book value per share is calculated by dividing Deficit by the number of common shares outstanding.

 

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ACCOUNTING TREATMENT OF THE EXCHANGE OFFERS

The exchange of our old notes for shares of GM common stock will be accounted for as a troubled debt restructuring pursuant to the provisions of SFAS No. 15, which provides for different types of debt restructurings (e.g., grants of equity in full settlement of debt, modification of terms of existing debt, or a combination of equity grants and debt modifications, the latter of which is referred to as a “combination of types”). Pursuant to the provisions of SFAS No. 15, this troubled debt restructuring would be accounted for as a grant of equity in full settlement of the debt since the exchange consideration, consisting of shares of GM common stock, received for any old notes tendered would result in the full settlement of the old notes exchanged. For the purposes of the pro forma adjustments, we have reflected, based on tenders at the Assumed Participation Level, the issuance to the tendering holders of 225 shares of GM common stock for each 1,000 U.S. dollar equivalent of principal amount (or accreted value as of the settlement date, if applicable) of old notes exchanged.

Assuming the satisfaction of the U.S. Treasury Condition, which we currently believe will require that at least 90% of the aggregate principal amount (or, in the case of discount notes, accreted value) of our outstanding old notes (including at least 90% of the aggregate principal amount of our outstanding old Series D notes) be tendered or redeemed pursuant to the call option (in the case of our non-USD old notes), we will issue approximately 5.5 billion shares of GM common stock with an estimated fair value of $2.3 billion. The estimated fair value of the shares of GM common stock issued pursuant to the exchange offers was derived using a discounted cash flow methodology based on the assumptions included in our current Viability Plan. As discussed under the “Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information for the Exchange Offers,” the final accounting treatment for the exchange offers will be based on the market price of our common stock at or about the date the exchange offers are consummated, and that market price per share could differ significantly from the estimated per share amount used in the unaudited pro forma condensed consolidated financial information for the exchange offers. The carrying amount of the old notes tendered will be greater than the estimated fair value of the shares of GM common stock issued pursuant to the exchange consideration. In applying troubled debt restructuring accounting pursuant to the provisions of SFAS No. 15, we would recognize an estimated gain on restructuring arising from the exchange equal to $21.0 billion, or the difference between the carrying value of old notes tendered and the fair value of the shares of GM common stock issued less any related fees or expenses. Any such gain on restructuring is reflected in accumulated deficit on the unaudited pro forma condensed consolidated balance sheet for the exchange offers, and is excluded from the unaudited pro forma condensed consolidated statements of operations for the exchange offers since this gain on restructuring is not expected to have a continuing impact on us.

The accounting treatment of the exchange offers as described in this section relates solely to the exchange of our old notes for shares of GM common stock. Discussion pertaining to other pro forma adjustments, including the U.S. Treasury Debt Conversion and the VEBA Modifications, is discussed further under the “Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information for the Exchange Offers,” included elsewhere in this prospectus.

In measuring the tax consequences of the unaudited pro forma condensed consolidated financial information for the exchange offers, the impact of The American Recovery and Reinvestment Act of 2009 (the “American Recovery and Reinvestment Act”) amending Code Section 382 of the Internal Revenue Code was applied as though it was effective as of March 31, 2009 for the unaudited pro forma condensed consolidated balance sheet and as of the beginning of the period for the unaudited pro forma condensed consolidated statements of operations.

 

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL

INFORMATION FOR THE EXCHANGE OFFERS

As of and For the Three Months Ended March 31, 2009 and For the Year Ended December 31, 2008

The following unaudited pro forma condensed consolidated financial information for the exchange offers as of and for the three months ended March 31, 2009 and for the year ended December 31, 2008 (the “Unaudited Pro Forma Condensed Consolidated Financial Information for the Exchange Offers”) has been derived by applying the pro forma adjustments set forth below to our historical consolidated financial statements as of and for the three months ended March 31, 2009 and for the year ended December 31, 2008, which are incorporated into this prospectus by reference from our quarterly report on Form 10-Q for the three months ended March 31, 2009 and our current report on Form 8-K filed on May 14, 2009 for the year ended December 31, 2008.

Pursuant to the requirements under Article 11 of Regulation S-X, the unaudited pro forma condensed consolidated statements of operations for the exchange offers gives effect to adjustments for transactions expected to have a continuing impact on us, that (1) are directly attributable to the exchange offers and are factually supportable, and (2) represent material events that have occurred and had, or will have, a material effect on our financial statements and capital structure. The unaudited pro forma condensed consolidated balance sheet gives effect to adjustments for transactions regardless of whether they have a continuing impact on us or are non-recurring, that are (1) directly attributable to the exchange offers and are factually supportable, and (2) represent material events which have occurred after March 31, 2009 and had, or will have, a material effect on our financial statements and capital structure.

The unaudited pro forma condensed consolidated financial information for the exchange offers assumes that each of the adjustments below that are directly attributable to the exchange offers and factually supportable had occurred as of March 31, 2009 for the unaudited pro forma condensed consolidated balance sheet, and as of the beginning of the period for the unaudited pro forma condensed consolidated statements of operations:

 

   

consummation of the transactions contemplated by the exchange offers, including the payment of related fees and expenses;

 

   

the U.S. Treasury Debt Conversion;

 

   

the VEBA Modifications;

 

   

additional working capital loans under the First U.S. Treasury Loan Agreement that occurred subsequent to March 31, 2009;

 

   

par value reduction of GM common stock to $0.01 per share;

 

   

increase in the number of authorized shares of GM common stock; and

 

   

1-for-100 reverse stock split of GM common stock.

In addition to the adjustments above, the unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2009 and for the year ended December 31, 2008 assume that the following adjustments that are directly attributable to the exchange offers and factually supportable had occurred as of the beginning of the period:

 

   

all borrowings under the First U.S. Treasury Loan Agreement and borrowings under the Second U.S. Treasury Loan Agreement that occurred prior to March 31, 2009; and

 

   

our purchase of an additional ownership interest in GMAC that occurred during the three months ended March 31, 2009.

 

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL

INFORMATION FOR THE EXCHANGE OFFERS—Continued

As of and For the Three Months Ended March 31, 2009 and For the Year Ended December 31, 2008

The unaudited pro forma condensed consolidated financial information for the exchange offers gives effect to the following adjustments that represent events that had or will have a material effect on our financial statements and capital structure:

 

   

modifications to the terms of certain secured borrowing facilities that occurred during the three months ended March 31, 2009 (reflected as adjustments to the unaudited pro forma condensed consolidated statements of operations only, as if they occurred as of the beginning of the period);

 

   

borrowings under the EDC Loan Agreement that occurred subsequent to March 31, 2009;

 

   

assumed borrowings under the Receivables Program arising subsequent to March 31, 2009; and

 

   

settlement of certain derivative contracts that occurred subsequent to March 31, 2009 (reflected as an adjustment to the unaudited pro forma condensed consolidated balance sheet only).

The unaudited pro forma condensed consolidated financial information for the exchange offers assumes, among other things, the satisfaction of the U.S. Treasury Condition, which we currently believe will require the exchange or redemption pursuant to the call option (in the case of our non-USD old notes) of at least 90% of the aggregate principal amount (or, in the case of discount notes, accreted value) of our outstanding old notes (including at least 90% of the aggregate principal amount of our outstanding old Series D notes) for the exchange consideration. The actual exchange of our old notes could be more or less than the level of participation assumed for the exchange offers, which would impact the pro forma total debt and pro forma stockholders’ deficit as of March 31, 2009, and would impact the pro forma interest expense and the pro forma loss per share for the three months ended March 31, 2009 and for the year ended December 31, 2008.

The U.S. Treasury Debt Conversion and VEBA Modifications will result in significant dilution to our current common stockholders, and will result in pro forma ownership levels of approximately 1.0% and 9.1% for existing stockholders and tendering holders, respectively, assuming the Assumed Participation Level in the exchange offers and after shares are issued to the New VEBA. The actual effects of the U.S. Treasury Debt Conversion and satisfaction of the VEBA obligations in exchange for GM common stock on our financial position and results of operations could be different than the levels assumed for the unaudited pro forma condensed consolidated financial information for the exchange offers and such differences could be material.

In connection with the preparation of our consolidated financial statements for the year ended December 31, 2008, we concluded that there was substantial doubt about our ability to continue as a going concern and our independent registered public accounting firm included a statement in their audit report related to the existence of substantial doubt about our ability to continue as a going concern due to our recurring losses from operations, stockholders’ deficit, and inability to generate sufficient cash flow to meet our obligations and sustain our operations. Notwithstanding this conclusion, our consolidated financial statements and unaudited pro forma condensed consolidated financial information for the exchange offers have been prepared assuming that we will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.

The unaudited pro forma condensed consolidated financial information for the exchange offers is based on assumptions that we believe are reasonable and should be read in conjunction with “Capitalization” and “Accounting Treatment of the Exchange Offers,” included elsewhere in this prospectus, and our consolidated financial statements and related notes thereto as of and for the three months ended March 31, 2009 and for the year ended December 31, 2008, which are incorporated into this prospectus by reference from our quarterly report on Form 10-Q for the three months ended March 31, 2009 and our current report on Form 8-K filed on May 14, 2009 for the year ended December 31, 2008.

 

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL

INFORMATION FOR THE EXCHANGE OFFERS—Continued

As of and For the Three Months Ended March 31, 2009 and For the Year Ended December 31, 2008

 

The unaudited pro forma condensed consolidated financial information for the exchange offers does not give effect to the Labor Modifications or the restructuring (including the reduction in U.S. dealers and brands) and other actions to be undertaken pursuant to our current Viability Plan because these actions do not currently meet the requirements for pro forma presentation under Article 11 of Regulation S-X. Although management expects that the Labor Modifications will result in cost savings and the actions undertaken pursuant to our current Viability Plan will result in near-term restructuring and impairment charges and in improved financial performance in the future, no assurance can be given that these anticipated cost savings or projected operational and financial improvements will be realized.

The unaudited pro forma condensed consolidated financial information for the exchange offers is presented for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have actually been reported had the exchange offers and other pro forma events been consummated as of March 31, 2009 or as of the beginning of the period, respectively, nor is it necessarily indicative of our future financial position or results of operations. The actual effects of the exchange offers and other pro forma events on our financial position or results of operations may be different than what we have assumed or estimated, and these differences may be material.

 

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

FOR THE EXCHANGE OFFERS

As of March 31, 2009

(Dollars in millions)

 

        Pro Forma Adjustments for the Exchange Offers             Pro Forma
   
Historical
  Exchange of
Old Notes
and New
Equity
        U.S.
Treasury Loans
and VEBA
Modifications
      Pro Forma
for the
Exchange Offers
  Other
Pro Forma
Adjustments
       

ASSETS

                 

Current Assets

                 

Cash and cash equivalents

  $   11,448   $   (240)     a   $   2,000   d   $   12,726   $   (35)     e   $     12,588
      (482)     a           369     f  
                (472 )   t  

Marketable securities

    132     —           —         132     —           132
                                             

Total cash and marketable securities

    11,580     (722 )       2,000       12,858     (138 )       12,720

Accounts and notes receivable, net

    7,567     —           —         7,567     —           7,567

Inventories

    11,606     —           —         11,606     —           11,606

Equipment on operating leases, net

    3,430     —           —         3,430     —           3,430

Other current assets and deferred income taxes

    2,593     —           —         2,593     (46 )   t     2,547
                                             

Total current assets

    36,776     (722)         2,000       38,054     (184 )       37,870

Non-Current Assets

                 

Equity in net assets of nonconsolidated affiliates

    2,447     —           —         2,447     —           2,447

Property, net

    37,625     —           —         37,625     —           37,625

Goodwill and intangible assets, net

    242     —           —         242     —           242

Deferred income taxes

    89     —           —         89     —           89

Prepaid pension

    106     —           —         106     —           106

Equipment on operating leases, net

    375     —           —         375     —           375

Other assets

    4,630     (223)     b     —         4,407     (114 )   t     4,293
                                             

Total non-current assets

    45,514     (223)         —         45,291     (114 )       45,177
                                             

Total Assets

  $ 82,290   $ (945)       $ 2,000     $ 83,345   $ (298 )     $ 83,047
                                             

See Accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

for the Exchange Offers.

 

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

FOR THE EXCHANGE OFFERS—Continued

As of March 31, 2009

(Dollars in millions)

 

          Pro Forma Adjustments for the
Exchange Offers
              Pro Forma  
   
Historical
    Exchange of
Old Notes
and New
Equity
        U.S.
Treasury
Loans and
VEBA
Modifications
        Pro
Forma for
the
Exchange
Offers
    Other
Pro Forma
Adjustments
       

TOTAL LIABILITIES AND EQUITY (DEFICIT)

                 

Current Liabilities

                 

Accounts payable (principally trade)

  $ 18,253     $ —         $ —         $ 18,253     $   (735)     e   $ 17,518  

Short-term borrowings and current portion of long-term debt, excluding U.S. Treasury Debt

    11,101       (888 )   b     —           10,213       369     f     10,582  

U.S. Treasury Debt

    14,455       —           2,000     d     8,228       700     e     8,928  
          (8,227 )   o        

Accrued expenses

    36,989       (482 )   a, h     —       h     36,507       (104 )   h, t     36,403  
                                                     

Total current liabilities

    80,798       (1,370 )       (6,227 )       73,201       230         73,431  

Non-Current Liabilities

                 

Long-term debt

    28,846       (22,897 )   b     —           5,949       —           5,949  

Postretirement benefits other than pensions

    22,503       —           (242 )   o     22,261       —           22,261  

Pensions

    24,476       —           —           24,476       —           24,476  

Other liabilities and deferred income taxes

    16,187       —       h     (66 )   o, h     16,121       (175 )   h, t     15,946  
                                                     

Total non-current liabilities

    92,012       (22,897 )       (308 )       68,807       (175 )       68,632  
                                                     

Total Liabilities

    172,810       (24,267 )       (6,535 )       142,008       55         142,063  

Equity (Deficit)

                 

Preferred stock

    —         —           —           —         —           —    

Preference stock

    —         —           —           —         —           —    

$1 2/3 par value common stock, historical $0.01 par value for pro forma

    1,018       9,141     c     (62,091 )   n     4       —           4  
          51,936     o        

Capital surplus (principally additional paid-in capital)

    16,489       (6,837 )   c     62,091     n     32,895       —           32,895  
          (38,848 )   o        

Accumulated deficit

    (76,703 )     21,018     b     (4,795 )   o     (60,480 )     (353 )   t     (60,833 )

Accumulated other comprehensive loss

    (31,946 )     —           242     o     (31,704 )     —           (31,704 )
                                                     

Total GM stockholders’ deficit

    (91,142 )     23,322         8,535         (59,285 )     (353 )       (59,638 )

Noncontrolling Interests

    622       —           —           622       —           622  
                                                     

Total Deficit

    (90,520 )     23,322         8,535         (58,663 )     (353 )       (59,016 )
                                                     

Total Liabilities and Deficit

  $ 82,290     $ (945 )     $ 2,000       $ 83,345     $ (298 )     $ 83,047  
                                                     

See Accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

for the Exchange Offers.

 

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE EXCHANGE OFFERS

For the Three Months Ended March 31, 2009

(Dollars in millions, except per share amounts)

 

         

Pro Forma Adjustments for the Exchange Offers

                 
    Historical     Exchange of
Old Notes
and New
Equity
        U.S.
Treasury
Loans and
VEBA
Modifications
        Pro Forma
for the
Exchange Offers
    Other
Pro Forma
Adjustments
        Pro Forma  

Net sales and revenue

                 

Automotive sales

  $ 22,232     $ —         $ —         $  22,232     $  —         $  22,232  

Other revenue

    199       —           —           199       —           199  
                                                     

Total net sales and revenue

    22,431       —           —           22,431       —           22,431  
                                                     

Costs and expenses

                 

Cost of sales

    24,611       —           (225 )   q     24,386       —           24,386  

Selling, general and administrative expense

    2,497       —           —           2,497       —           2,497  

Other expenses

    985       —           —           985       —           985  
                                                     

Total costs and expenses

    28,093       —           (225 )       27,868       —           27,868  
                                                     

Operating loss

    (5,662 )     —           225         (5,437 )     —           (5,437 )

Equity in loss of GMAC LLC

    (500 )     —           13     r     (487 )     —           (487 )

Interest expense

    (1,230 )     464     i     (70 )   j     (586 )     (25 )   j     (657 )
          (49 )   k       (46 )   l  
          299     p        

Interest income and other non-operating income, net

    425       —           (99 )   s     326       —           326  

Gain on extinguishment of debt

    906       —           —           906       —           906  
                                                     

Loss before income taxes and equity income

    (6,061 )     464         319         (5,278 )     (71 )       (5,349 )

Income tax benefit

    (114 )     —       m     —       m     (114 )     —       m     (114 )

Equity income, net of tax

    48       —           —           48       —           48  
                                                     

Net Loss

  $ (5,899 )   $ 464       $ 319       $ (5,116 )   $ (71 )     $ (5,187 )

Less: Net income attributable to noncontrolling interests

    (76 )     —           —           (76 )     —           (76 )
                                                     

Net loss attributable to GM Common Stockholders

  $ (5,975 )   $ 464       $ 319       $ (5,192 )   $ (71 )     $ (5,263 )
                                                     

Before reverse stock split:

                 

Loss per share, basic and diluted attributable to GM Common Stockholders

  $ (9.78 )           $ (0.14 )       $ (0.14 )
                                                     

Weighted average common shares outstanding, basic and diluted (millions)

    611       5,484 *       31,162 *       37,257           37,257  
                                                     

After reverse stock split:

                 

Loss per share, basic and diluted attributable to GM Common Stockholders

  $ (966.25 )           $ (13.92 )       $ (14.11 )
                                                     

Weighted average common shares outstanding, basic and diluted (millions)

    6       55         312         373           373  
                                                     

 

* The shares utilized for each pro forma adjustment are calculated based on exchange rates as of March 31, 2009.

See Accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

for the Exchange Offers.

 

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE EXCHANGE OFFERS

For the Year Ended December 31, 2008

(Dollars in millions, except per share amounts)

 

          Pro Forma Adjustments for the Exchange Offers                  
    Historical     Exchange of
Old Notes
and New
Equity
        U.S.
Treasury
Loans and
VEBA
Modifications
        Pro Forma
for the
Exchange Offers
    Other
Pro Forma
Adjustments
        Pro Forma  

Net sales and revenue

                 

Automotive sales

  $ 147,732     $ —         $ —         $   147,732     $ —         $   147,732  

Other revenue

    1,247       —           —           1,247       —           1,247  
                                                     

Total net sales and revenue

    148,979       —           —           148,979       —           148,979  
                                                     

Costs and expenses

                 

Cost of sales

    149,311       —           (300 )   q     149,011       —           149,011  

Selling, general and administrative expense

    14,253       —           —           14,253       —           14,253  

Other expenses

    6,699       —           —           6,699       —           6,699  
                                                     

Total costs and expenses

    170,263       —           (300 )       169,963       —           169,963  
                                                     

Operating loss

    (21,284 )     —           300         (20,984 )     —           (20,984 )

Equity in loss of GMAC LLC

    (6,183 )     —           —       r     (6,183 )     —           (6,183 )

Interest (expense), net

    (2,428 )     1,873     i     (858 )   j     (1,149 )     (120 )   j     (1,496 )
          (327 )   k       (227 )   l  
          591     p        

Interest income and other non-operating income, net

    424       —           —           424       —           424  
                                                     

Loss from continuing operations before income taxes, equity income

    (29,471 )     1,873         (294 )       (27,892 )     (347 )       (28,239 )

Income tax expense

    1,766       —       m     —       m     1,766       —       m     1,766  

Equity income, net of tax

    186       —           —           186       —           186  
                                                     

Loss from continuing operations

    (31,051 )     1,873         (294 )       (29,472 )     (347 )       (29,819 )

Less: Net (income) loss attributable to noncontrolling interests

    108       —           —           108       —           108  
                                                     

Net loss attributable to GM Common Stockholders

  $ (30,943 )   $   1,873       $ (294 )     $ (29,364 )   $   (347 )     $ (29,711 )
                                                     

Before reverse stock split:

                 

Loss per share basic and diluted attributable to GM Common Stockholders

  $ (53.47 )           $ (0.78 )       $ (0.80 )
                                                     

Weighted average common shares outstanding, basic and diluted (millions)

    579       5,484 *       31,162 *       37,225           37,225  
                                                     

After reverse stock split:

                 

Loss from continuing operations per share, basic and diluted

  $   (5,362.87 )           $ (78.72 )       $ (79.65 )
                                                     

Weighted average common shares outstanding, basic and diluted (millions)

    6       55         312         373           373  
                                                     

 

* The shares utilized for each pro forma adjustment are calculated based on exchange rates as of March 31, 2009.

See Accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Information for the Exchange Offers.

 

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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL

INFORMATION FOR THE EXCHANGE OFFERS

Notes

The pro forma adjustments illustrated below assume, among other things, the satisfaction of the U.S. Treasury Condition, which we currently believe will require that at least 90% of the aggregate principal amount (or, in the case of discount notes, accreted value) of our outstanding old notes (including at least 90% of the aggregate principal amount of our outstanding old Series D notes) be tendered in the exchange offers or called for redemption pursuant to the call option (in the case of the non-USD old notes); and that as consideration for the old notes, the tendering holders will receive 225 shares of GM common stock for each 1,000 U.S. dollar equivalent of principal amount (or accreted value as of the settlement date, if applicable) of old notes exchanged. The actual exchange of our old notes could be more or less than the level of participation assumed for the exchange offers which would impact the pro forma total debt and pro forma stockholders’ deficit as of March 31, 2009, and would impact the pro forma interest expense and pro forma loss per share for the three months ended March 31, 2009 and for the year ended December 31, 2008. Additionally, we have estimated the fair value of the shares of GM common stock provided to tendering holders, the U.S. Treasury (or its designee) and the New VEBA by using a discounted cash flow methodology based on the assumptions used in our current Viability Plan. The final accounting treatment for the exchange offers will be based on the market price of our common stock at or about the date the exchange offers are consummated, and that market price per share could differ significantly from the estimated per share amount used in the unaudited pro forma condensed consolidated financial information for the exchange offers. The estimated fair value may fluctuate significantly through the date of the consummation of the exchange offers. The unaudited pro forma condensed consolidated financial information for the exchange offers does not give effect to the Labor Modifications or the restructuring (including the reduction in U.S. dealers and brands) and other actions (described further under “The Restructuring—Viability Plan”) contemplated in our current Viability Plan because such actions currently do not meet the requirements for pro forma presentation under Article 11 of Regulation S-X. Although management expects that the Labor Modifications will result in cost savings and the actions undertaken pursuant to our current Viability Plan will result in near-term restructuring and impairment charges and in improved financial performance in the future, no assurance can be given that these anticipated cost savings will be realized.

For purposes of the unaudited pro forma condensed consolidated financial information, we have assumed the consummation of the exchange offers with holders tendering in the exchange offers at the Assumed Participation Level and that:

 

   

the aggregate amount of GM common stock issued in connection with the exchange offers will be approximately 5.5 billion shares,

 

   

the aggregate amount of GM common stock issued to the U.S. Treasury (or its designee) pursuant to the U.S. Treasury Debt Conversion will be approximately 31.2 billion shares,

 

   

the aggregate amount of GM common stock to be issued to the New VEBA for the VEBA Modifications will be approximately 23.2 billion shares when issued on the Implementation Date (as defined in Note (o) below), and

 

   

the aggregate amount of GM common stock retained by existing stockholders will be approximately 0.6 billion shares.

The assumed pro forma shares to be issued to the New VEBA will not be outstanding until the Implementation Date, and for purposes of the pro forma financial information the dilutive effect of the 23.2 billion shares to be issued to the New VEBA at a future date are reflected in the pro forma adjustments and estimated fair value per share of GM common stock but the shares are not reflected as issued and outstanding pro

 

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forma shares of GM common stock. Upon issuance of the GM common stock to the New VEBA, tendering holders will have their ownership interest diluted to 9.1% at the Assumed Participation Level. Because the various transactions that will occur on the Implementation Date are not reflected in the unaudited pro forma condensed consolidated financial information (of which the pro forma shares to be issued are just one component part), such shares are not reflected as issued for purposes of the unaudited pro forma condensed consolidated financial information. The final allocation of GM common stock between the U.S. Treasury (or its designee) and the New VEBA will be determined in the future.

 

(a) To reflect the following adjustments to cash and cash equivalents pursuant to the exchange offers:

 

(Dollars in millions)

   Amounts  

Estimated cost of the exchange offers charged to earnings

   $   (240 )

Cash payments relating to accrued and unpaid interest on old notes made to noteholders

     (482 )
        

Total

   $   (722 )
        

 

(b) To reflect the decrease in the total carrying amount of debt (excluding the effects of the U.S. Treasury Debt Conversion) and the effects on accumulated deficit, after applying troubled debt restructuring accounting upon consummation of the exchange offers with holders tendering in the exchange offers at the Assumed Participation Level:

 

(Dollars in millions)

   Amounts  

Decrease in short-term borrowings and current portion of long-term debt

   $ (888 )

Decrease in long-term debt

     (22,897 )

Decrease in debt issuance costs

     223  
        

Total decrease in debt and debt issuance costs due to the exchange of old notes

     (23,562 )

Reduced by:

  

Estimated fair value of shares issued pursuant to the exchange offers (5.5 billion shares of GM common stock issued at an estimated fair value of $0.42 per share before giving effect to the 1-for-100 reverse stock split) (Note (c))

     2,304  

Estimated cost of the exchange offers

     240  
        

Gain on restructuring of debt due to the exchange offers

   $   (21,018 )
        

 

     The exchange offers will be accounted for as a troubled debt restructuring pursuant to the provisions of SFAS No. 15. Troubled debt restructuring accounting requires the comparison of the carrying value of the existing debt tendered to the fair value of the equity granted in full settlement of the debt less any related fees or expenses. If the carrying value of the tendered debt exceeds the fair value of the equity granted in settlement of the old notes, a troubled debt restructuring gain would be recognized at the date the exchange is consummated. Any pro forma gain we would realize through the application of troubled debt restructuring accounting is reflected in accumulated deficit on the unaudited pro forma condensed consolidated balance sheet for the exchange offers, and is excluded from the unaudited pro forma condensed consolidated statements of operations for the exchange offers since this gain on restructuring is not expected to have a continuing impact on us. At March 31, 2009, the carrying value of the old notes subject to the exchange offers is approximately $26.4 billion with a stated par value of approximately $27.1 billion.

 

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     The following table sets forth an unaudited pro forma sensitivity analysis for the exchange offers as of March 31, 2009 to estimate the effect of changes in the percentage of holders electing to tender their old notes and to estimate the effect of changes in the estimated fair value per share of GM common stock issued to tendering holders as exchange consideration. The estimates presented in this unaudited pro forma sensitivity analysis may differ from actual results, and these differences may be material. In the table below, any pro forma gain we would realize through the application of troubled debt restructuring accounting is reflected in accumulated deficit on the unaudited pro forma condensed consolidated balance sheet for the exchange offers, and is excluded from the unaudited pro forma condensed consolidated statements of operations for the exchange offers since this gain on restructuring is not expected to have a continuing impact on us.

 

     Assuming 90% Aggregate
Tender or Redemption
of Old Notes,
Pro Forma Impact on: *
    Assuming 100% Tender
of Old Notes,
Pro Forma Impact on: *
 

Estimated fair value of equity per share
(assumed share price, before giving effect to
the 1-for-100 reverse stock split)

   Common
stock
and
capital
surplus
   Accumulated
deficit,
arising from
gain
    Total
debt
    Common
stock
and
capital
surplus
   Accumulated
deficit,
arising from
gain
    Total
debt
 
(Dollars in millions, except share price)                                   

$1.00

   $   5,484    $   (17,838 )   $   (23,785 )   $   6,094    $   (19,846 )   $   (26,428 )

$0.75

     4,113      (19,209 )     (23,785 )     4,570      (21,370 )     (26,428 )

$0.50

     2,742      (20,580 )     (23,785 )     3,047      (22,893 )     (26,428 )

$0.42

     2,304      (21,018 )     (23,785 )     2,559      (23,381 )     (26,428 )

$0.25

     1,371      (21,951 )     (23,785 )     1,523      (24,417 )     (26,428 )

$0.10

     548      (22,774 )     (23,785 )     609      (25,331 )     (26,428 )

$0.00

     —        (23,322 )     (23,785 )     —        (25,940 )     (26,428 )
 
  * The table above does not include the balance sheet accounts of cash or other assets that will be reduced for the estimated costs of the exchange offers of $240 million and the decrease in debt issuance costs of $223 million at the Assumed Participation Level and $248 million at the 100% participation level in the exchange offers.

 

     We have estimated the fair value per share of GM common stock issued to the tendering holders by using a discounted cash flow methodology based on the assumptions included in our current Viability Plan, which assumes the shares to be issued to the New VEBA. We have prepared the unaudited pro forma condensed consolidated financial information based on an estimated fair value of $0.42 per share before giving effect to the 1-for-100 reverse stock split, which is derived from the discounted cash flows in our current Viability Plan utilizing a 10.5% weighted average cost of capital (“WACC”). This per share amount is based on an estimated equity value of $25.4 billion. The following provides additional unaudited sensitivity analyses pertaining to the estimated fair value per share of the GM common stock issued to the tendering holders:

 

   

In estimating our equity value, a WACC of 10.5% was used as the discount rate for measuring the present value of the projected cash flows. A 1% increase/decrease in the discount rate would decrease/increase the estimated equity value by approximately $1.9 billion (decrease/increase the estimated fair value by approximately $0.03 per share before giving pro forma effect to the reverse stock split). Assuming a WACC of 27.9%, the estimated fair value per share of GM common stock is $0.00.

 

   

In estimating our equity value, the U.S. seasonally adjusted annual rate (“U.S. SAAR”) of light vehicle sales for the years 2009 through 2014 was assumed to be 10.5, 12.5, 14.3, 16.0, 16.4 and 16.8 million units, respectively. A 1.0 million unit increase in the U.S. SAAR for the years 2009 and 2010 combined with a 1.5 million unit increase in the U.S. SAAR for the years 2011 through 2014 would increase the estimated equity value by $12.2 billion (increase the estimated fair value by $0.20 per share before giving pro forma effect to the reverse stock split). A 1.0 million unit decrease in the U.S. SAAR for the years 2009 and 2010 combined with a 1.5 million unit decrease in the U.S. SAAR for the

 

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years 2011 through 2014 would decrease the estimated equity value by $12.8 billion (decrease the estimated fair value by $0.21 per share before giving pro forma effect to the reverse stock split).

 

   

In estimating our equity value, our GMNA market share for the years 2009 through 2014 was assumed to be 19.5%, 18.9%, 18.6%, 18.4%, 18.5% and 18.3%, respectively. A one percentage point increase in the GMNA market share for these years would increase the estimated equity value by $10.8 billion (increase the estimated fair value by $0.18 per share before giving pro forma effect to the reverse stock split). A one percentage point decrease in the GMNA market share for these years would decrease the estimated equity value by $11.4 billion (decrease the estimated fair value by $0.19 per share before giving pro forma effect to the reverse stock split).

 

   

In estimating our equity value, our GMNA contribution margin for the years 2009 through 2014 was assumed to be 29.9%, 31.7%, 31.4%, 31.0%, 31.2% and 31.0%, respectively. A one percentage point increase in the GMNA contribution margin for these years would increase the estimated equity value by $6.2 billion (increase the estimated fair value by $0.10 per share before giving pro forma effect to the reverse stock split). A one percentage point decrease in the GMNA contribution margin for these years would decrease the estimated equity value by $6.4 billion (decrease the estimated fair value by $0.11 per share before giving pro forma effect to the reverse stock split).

 

     We continue to work towards a restructuring of our German and certain other European operations, which could include a third party investment in a new vehicle manufacturing company that would own all or a significant part of our European operations. We are currently in talks with the German government and several parties with respect to such an investment. If consummated, this restructuring could significantly reduce our ownership interest and control over substantially all of our GME segment. For purposes of estimating the consolidated equity value and related estimated fair value per share of GM common stock used in the unaudited condensed consolidated financial information for the exchange offers, we have eliminated from our estimated consolidated equity value 50% of the estimated value of our GME segment.

 

     The final accounting treatment for the exchange offers will be based on the market price of our common stock at or about the date the exchange offer is consummated, and that market price per share could differ significantly from the estimated per share amount used in these pro forma financial statements.

 

(c) Adjustment to capital accounts to reflect the issuance of shares of GM common stock pursuant to the exchange offers before giving effect to the 1-for-100 reverse stock split and change in par value per share to $0.01:

 

(Dollars in millions)

   Amounts  

Increase in $1 2/3 par value common stock due to the issuance of shares of GM common stock (5.5 billion shares)

   $ 9,141  

Adjustment to additional paid-in capital due to issuance of shares of GM common stock

     (6,837 )
        

Estimated fair value of 5.5 billion shares of GM common stock issued

   $ 2,304  
        

 

(d) On April 22, 2009, we and the U.S. Treasury entered into an amendment to the First U.S. Treasury Loan Agreement, pursuant to which, among other things, the U.S. Treasury agreed to provide us $2.0 billion in additional working capital loans under the First U.S. Treasury Loan Agreement. We borrowed the $2.0 billion on April 24, 2009 and that amount has been reflected as a pro forma adjustment. In connection with the amendment to provide the $2.0 billion of additional loans, we issued to the U.S. Treasury a promissory note in an aggregate principal amount of $133.4 million as part of the compensation for the additional loans, which will be reflected as a debt discount over the term of the additional loans.

 

(e)

To reflect $700 million in available funding from the U.S. Treasury for use in the Receivables Program, an automotive supplier support program sponsored by the U.S. Treasury. The Receivables Program allows suppliers to sell their eligible accounts receivable from us to GM Supplier Receivables LLC (“GM Receivables”), a bankruptcy-remote special purpose vehicle established by us. GM Receivables is included in our consolidated accounts and we expect the U.S. Treasury will provide a maximum $3.5 billion loan

 

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facility to GM Receivables. Eligible suppliers can elect to either (i) receive immediate payment from GM Receivables on their receivables from us at a 3% discount or (ii) have their receivables from us guaranteed by the U.S. Treasury for a 2% fee. GM Receivables will be responsible for paying interest on any loans provided by the U.S. Treasury at an annual rate of LIBOR plus 3.5% with a minimum of 5.5%, as well as administrative fees of 25 basis points per annum on the average daily receivables balance. The U.S. Treasury will also receive a minimum $100 million fixed fee for this arrangement which is payable at the end of the Receivables Program. Additional borrowings of up to $2.8 billion are available under the Receivables Program that should they occur would increase our Short-term borrowings outstanding and result in a corresponding decrease in Accounts payable (principally trade) outstanding assuming eligible suppliers elect option (i) above. Funding under this program is not subject to the U.S. Treasury Debt Conversion.

As of May 13, 2009, we have initially funded $35 million into the Receivables Program. The $735 million pro forma adjustment assumes eligible suppliers elected option (i) above to the full extent of available funding under the Receivables Program and reflects the resulting maximum reduction of accounts payable we could achieve based on our initial funding and currently available funding from the U.S. Treasury.

 

(Dollars in millions)

   Amounts  

Initial cash to fund the Receivables Program

   $ (35 )

Increase to U.S. Treasury Debt

     (700 )
        

Total reduction to accounts payable

   $ (735 )
        

 

(f) To reflect the proceeds of $369 million received under the EDC Loan Agreement entered into on April 29, 2009. The EDC Loan Agreement provides GMCL with C$3.0 billion in a three-year short-term bridge loan, subject to certain borrowing conditions. GMCL borrowed C$500 million under the EDC Loan Agreement on April 30, 2009. The $369 million pro forma adjustment reflects the Canadian borrowings using the applicable foreign currency exchange rate as of March 31, 2009. GMCL is also required to issue a special interest promissory note to EDC equal to 6.67% of the principal amount of each loan under the EDC Loan Agreement (in an aggregate amount of up to C$200 million ($148 million)) as evidence of GMCL’s obligation to pay additional interest to EDC on such loan. For accounting purposes, each such note will be reflected as a debt discount over the term of the relevant loan. GMCL issued a special interest promissory note in the amount of C$33 million in connection with the initial C$500 million borrowing.

 

(g) In order to execute our current Viability Plan, we currently forecast a need for U.S. Treasury funding totaling $27.0 billion, representing the $22.5 billion requested in our February 17, 2009 Viability Plan submission under our baseline scenario, plus an additional $4.5 billion needed to implement incremental restructuring actions, cover higher projected negative operating cash flow primarily due to lower forecasted vehicle sale volumes, and to compensate for lower than originally forecasted proceeds from asset sales and other sources of financing, including Section 136 Loans.

The following amounts are not included in the unaudited pro forma financial statements as we do not yet have definitive agreements:

 

   

We currently forecast that we will need an additional $2.6 billion of working capital loans from the U.S. Treasury prior to June 1, 2009 and $9.0 billion thereafter. If we were to receive the additional $2.6 billion of loans and $9.0 billion in funding for promissory notes, we expect we would be required to issue to the U.S. Treasury additional promissory notes in an aggregate principal amount of $173.4 million and $600.3 million, respectively, as part of the compensation for this funding.

 

   

The current Viability Plan assumes that we will receive $5.7 billion of Section 136 Loans and an additional $5.6 billion in funding from foreign governments (which contemplates $0.8 billion (C$1.0 billion) of funding from the Canadian government, of which $0.4 billion (C$0.5 billion) was received from the EDC under the EDC Loan Agreement on April 30, 2009 and is reflected in Note (f) above).

 

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We cannot assure you that the U.S. Treasury will provide any additional loans. In addition, we do not expect that the Department of Energy will determine that we meet the viability requirement for eligibility to receive Section 136 Loans unless and until the U.S. Treasury approves our Viability Plan. Even if the U.S. Treasury approves our Viability Plan, we cannot be certain that the Department of Energy will approve our requests for Section 136 Loans. We also are in the process of requesting temporary loan support from certain foreign governments, including Canada, Germany, the United Kingdom, Sweden and Thailand. We believe that obtaining funding from these governmental sources will be necessary to continue to operate our business in its anticipated scope. Except as discussed in Note (f), we have not received any commitment with regard to the additional proposed borrowings from either the U.S. government or any foreign governments, and there is no assurance that we will be successful in obtaining the additional governmental funding we will need to continue to operate our business. Moreover, even if we receive commitments for the required funding (our receipt of evidence of the U.S. Treasury Commitment is a condition to the consummation of the exchange offers), we do not know what the terms of, and conditions for, borrowing will be and cannot be sure we will be able to satisfy them as and when funding is needed. Unless otherwise indicated, we have not included the requested additional funding outlined above in our unaudited pro forma condensed consolidated financial information for the exchange offers. However, interest and other costs associated with such borrowings should they occur would be significant.

 

(h) We have significant tax attributes for which the related deferred tax assets have been fully offset by valuation allowances in our financial statements. The gain on extinguishment will be principally offset by the utilization of these attributes. The tax effect, if any, is not reflected in the unaudited pro forma condensed consolidated statements of operations for the exchange offers since the cancellation of indebtedness income is a non-recurring item.

On February 17, 2009, the American Recovery and Reinvestment Act amended Code Section 382 of the Internal Revenue Code. Code Section 382 imposes certain limitations on a corporation’s ability to utilize certain tax attributes (such as net operating losses) after an ownership change. The American Recovery and Reinvestment Act amended these rules to provide that the Code Section 382 limitations will not apply to an ownership change that occurs pursuant to a restructuring plan that both: (i) is required under a loan agreement or a commitment for a line of credit entered into with the Department of the Treasury under the Emergency Economic Stabilization Act of 2008 and (ii) is intended to result in a rationalization of the costs, capitalization and capacity with regard to the manufacturing workforce of and suppliers to the taxpayer and its subsidiaries.

GM Nova Scotia is expected to realize a forgiven amount under the debt forgiveness rules of the Income Tax Act (Canada) as a result of the implementation of the exchange offers for the old GM Nova Scotia notes and any exercise of the call option to settle the old GM Nova Scotia notes, and may otherwise realize forgiven amounts under these rules as a result of the settlement of other GM intercompany obligations owing by GM Nova Scotia as part of the implementation of the exchange offers and the exercise of the call option. The final impact to GM Nova Scotia in any such case under the rules of the Income Tax Act (Canada) is uncertain. However, the realization of a forgiven amount by GM Nova Scotia could cause adverse Canadian tax consequences to GM Nova Scotia for these purposes, including the inclusion of up to half of any such forgiven amount in computing the income of GM Nova Scotia. The unaudited pro forma condensed consolidated balance sheet does not include any adjustment for these potential tax consequences.

 

(i) To reflect the decrease in interest expense for the three months ended March 31, 2009 and for the year ended December 31, 2008 of $464 million and $1,873 million, respectively, due to the decrease in debt (excluding the effects of the U.S. Treasury Debt Conversion) from the consummation of the exchange offers at the Assumed Participation Level. If 100% of the holders tender in the exchange offers, the reduction in interest expense would increase by $52 million to $516 million for the three months ended March 31, 2009 and by $210 million to $2,083 million for the year ended December 31, 2008.

 

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(j) To reflect adjustments to interest expense to give effect to the following transactions as if all loans had been outstanding since the beginning of the period:

 

(Dollars in millions)

   Three Months
Ended
March 31, 2009
   Year Ended
December 31, 2008

Increase in cash interest expense due to borrowings of $13.4 billion under the First U.S. Treasury Loan Agreement which includes borrowings from the U.S. Treasury of $4.0 billion on December 31, 2008, $5.4 billion on January 21, 2009 and $4.0 billion on February 17, 2009

   $ 42    $ 670

Increase in cash interest expense due to the promissory note issued to the U.S. Treasury of $749 million on December 31, 2008 pursuant to the additional note agreement with the U.S. Treasury (the “U.S. Treasury Promissory Note”)

     —        37

Increase in cash interest expense due to additional borrowings from the U.S. Treasury of $884 million under the Second U.S. Treasury Loan Agreement on January 16, 2009

     1      44

Increase in cash interest expense due to the additional working capital loans under the First U.S. Treasury Loan Agreement from the U.S. Treasury of $2.0 billion on April 24, 2009

     25      100

Increase in cash interest expense due to the promissory note issued to the U.S. Treasury of $133.4 million on April 24, 2009 pursuant to the additional note agreement with the U.S. Treasury (the “U.S. Treasury Additional Promissory Note”)

     2      7
             

U.S. Treasury (Subject to Conversion) Total

   $ 70    $   858
             

Increase in cash interest expense for assumed borrowings of $700 million under the Receivables Program

   $ 10    $ 39

Increase in cash interest expense due to borrowings under the EDC Loan Agreement

     5      20

Increase in cash interest expense due to an increase in the interest rates on our $4.5 billion secured revolving credit facility, a $1.5 billion term loan and a $125 million secured credit facility modified prior to March 31, 2009. The modifications also waived our non-compliance with certain covenants in these agreements

     10      61
             

Other Total

   $ 25    $ 120
             

The pro forma adjustments to reflect the increase in the cash interest expense relating to the U.S. Treasury Debt have been prepared using an interest rate that was determined using the higher of the three-month LIBOR rate as of March 31, 2009 or 2%, plus an additional 3% pursuant to the terms of the relevant agreements. At March 31, 2009, the interest rate used to estimate the pro forma interest expense adjustments was 5% because the three-month LIBOR rate was lower than the 2% required minimum.

The pro forma adjustment to reflect the increase in cash interest expense relating to the $700 million under the Receivables Program has been prepared using an interest rate determined at LIBOR plus 3.5% with a minimum of 5.5% as well as an administrative fee of 25 basis points per annum on the average daily receivable balance.

The pro forma adjustment to reflect the increase in the cash interest expense relating to the EDC Loan Agreement has been prepared using an interest rate that was determined using the higher of the three-month CDOR rate as of March 31, 2009 or 2%, plus an additional 3% pursuant to the terms of the EDC Loan Agreement. At March 31, 2009, the interest rate used to estimate the pro forma interest expense adjustment was 5% because the three-month CDOR rate was lower than the 2% required minimum.

 

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A 1/8 percent variance in the rate used to determine interest expense on the total U.S. Treasury loans would increase/decrease our earnings by $5 million for the three months ended March 31, 2009 and $22 million for the year ended December 31, 2008.

An increase in borrowings under the Receivables Program from $700 million to the maximum facility of $3.5 billion would increase cash interest expense by approximately $39 million for the three months ended March 31, 2009 and $154 million for the year ended December 31, 2008.

 

(k) To reflect amortization of discount costs of $49 million related to the working capital loans under the First U.S. Treasury Loan Agreement for the three months ended March 31, 2009. The discount is being amortized through May 31, 2009. To reflect amortization of discount costs of $327 million for the year ended December 31, 2008 associated with the $13.4 billion under the First U.S. Treasury Loan Agreement, the $749 million under the U.S. Treasury Promissory Note, the working capital loans under the First U.S. Treasury Loan Agreement and the U.S. Treasury Additional Promissory Note, amortized over the contractual maturity for the year ended December 31, 2008.

 

(l) To reflect amortization of discount associated with the Secured Debt Modifications and the Receivables Program for the three months ended March 31, 2009 of $46 million and for the year ended December 31, 2008 of $227 million, amortized over the contractual maturity. The discount associated with the EDC Loan Agreement has not been reflected as an adjustment to the unaudited pro forma condensed consolidated statements of operations because such amounts are not material.

 

(m) The adjustments to interest expense and postretirement benefits other than pension costs do not result in an income tax consequence due to our ability to utilize our significant tax attributes, for which the related deferred tax assets were previously offset by a valuation allowance.

 

(n) To reflect the par value reduction of GM common stock to $0.01 per share and the 1-for-100 reverse stock split of GM common stock whereby each 100 shares of GM common stock registered in the name of a stockholder at the effective time of the reverse stock split will be converted into one share of GM common stock. The reverse stock split will occur following the effectiveness of the common stock increase. The 23.2 billion shares to be issued in the VEBA Modifications are not included in the adjustment below because the issuance of those shares has not been reflected as a pro forma adjustment as described in Note (o) below.

The reverse stock split and the reduction in par value of GM common shares will result in the following effect on our unaudited pro forma condensed consolidated balance sheet:

 

     Decrease in
common
stock
    Increase to
capital
surplus

(Dollars in millions)

          

Effect on historical 611 million shares outstanding at March 31, 2009

   $ (1,018 )   $ 1,018

Decrease in $1 2/3 par value common stock for the 5.5 billion shares issued pursuant to the exchange offers and 31.2 billion shares issued pursuant to the U.S. Treasury Debt Conversion

     (61,073 )     61,073
              

Total effect

   $   (62,091 )   $   62,091
              

 

(o)

We are currently in discussions with the U.S. Treasury regarding the terms of the U.S. Treasury Debt Conversion. For purposes of this prospectus, we have set as a condition to the closing of the exchange offers that we would issue GM common stock to the U.S. Treasury (or its designee) in exchange for (a) full satisfaction and cancellation of at least 50% of the face amount of our outstanding U.S. Treasury Debt at June 1, 2009 (such 50% currently estimated to be approximately $10 billion) and (b) full satisfaction and cancellation of our obligations under the warrant issued to the U.S. Treasury. For purposes of the unaudited pro forma financial information for the exchange offers, we have assumed that the U.S. Treasury will receive 51%, or approximately 31.2 billion shares, of GM common stock in satisfaction and cancellation of 50% of our outstanding U.S. Treasury Debt as of June 1, 2009, with a pro forma carrying value of approximately $8.2 billion. The difference between the actual expected reduction of $10 billion referred to

 

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above and the $8.2 billion reduction reflected in the pro forma adjustment is due to 50% of (i) differences between the face and pro forma carrying amount of the debt of $0.8 billion, and (ii) the additional $2.8 billion of working capital loans from the U.S. Treasury for which we would receive $2.6 billion of proceeds prior to June 1, 2009 but that is not reflected as a pro forma adjustment as explained in Note (g).

 

     In addition, we and the U.S. Treasury are currently in discussions with the UAW regarding the terms of the VEBA Modifications. We have proposed, and this prospectus assumes as a condition to the closing of the exchange offers, that the VEBA Modifications would provide, among other things, for the issuance of shares of GM common stock to the New VEBA in full satisfaction of at least $10 billion and up to $20 billion of obligations under the VEBA settlement agreement. Under the VEBA settlement agreement, our obligation to provide retiree healthcare coverage for UAW retirees and beneficiaries will terminate and become the obligation of the new plan and the New VEBA at the “Implementation Date,” which for purposes of the unaudited pro forma condensed consolidated financial information, we have assumed to be December 31, 2009. On this date, we would account for the establishment and funding of the New VEBA as a settlement and termination of our UAW hourly medical plan and mitigation plan. On the Implementation Date, we would issue consideration, including GM common stock, to the New VEBA and those shares would be considered issued and outstanding, and our liability for OPEB under SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions” (“SFAS No. 106”) for the UAW hourly medical plan and mitigation plan would be eliminated and replaced by the estimated fair value of the consideration remaining to be provided to the New VEBA. Because the various transactions that will occur on the Implementation Date are not reflected in the pro forma financial statements (of which the shares to be issued to the New VEBA are just one component part), the 23.2 billion shares to be issued to the New VEBA are not reflected as issued for purposes of the unaudited pro forma financial statements. The issuance of the shares to the New VEBA will have an additional dilutive effect on our existing stockholders.

 

     While the total percentage of GM common stock assumed to be issued to the U.S. Treasury on June 1, 2009 and to the New VEBA on the Implementation Date equals 89% at the 100% participation level and 89.9% at the Assumed Participation Level, neither (a) the percentage to be issued to each such party, nor (b) the percentage of each parties’ outstanding obligation owed by GM to be satisfied upon the U.S. Treasury Debt Conversion and VEBA Modifications is known, and are all subject to negotiation.

 

     Upon the completion of these transactions as currently assumed and the issuance of GM common stock to the New VEBA on the Implementation Date, based on the satisfaction of the U.S. Treasury Condition, which we currently believe will require that at least 90% of the aggregate principal amount (or, in the case of discount notes, accreted value) of our outstanding old notes (including at least 90% of the aggregate principal amount of the outstanding Series D notes) be tendered in the exchange offers or called for redemption pursuant to the call option (in the case of the non-USD old notes):

 

  (i) the aggregate amount of GM common stock to be issued in connection with the exchange offers, the U.S. Treasury Debt Conversion and the proposed VEBA Modifications would be approximately 59.9 billion shares which, based on the approximately 611 million shares of GM common stock outstanding as of March 31, 2009, would represent approximately 99% of the pro forma GM common stock upon consummation of the above transactions, and

 

  (ii) the percentage of pro forma GM common stock to be held by:

 

  a) holders of old notes tendered in the exchange offers would be 9.1%;

 

  b) the U.S. Treasury (or its designee) and the New VEBA would collectively be 89.9%; and

 

  c) existing GM common stockholders would be approximately 1.0%.

 

     Assuming full participation in the exchange offers, the percentage of pro forma GM common stock to be held by (i) holders of old notes tendered in the exchange offers would be 10%, (ii) the U.S. Treasury (or its designee) and the New VEBA would collectively be 89%, and (iii) existing GM common stockholders would be approximately 1%.

 

    

If ultimately agreed to, the U.S. Treasury Debt Conversion would reduce outstanding debt by the amount of debt converted and decrease stockholders’ deficit by a similar amount less any related fees or expenses.

 

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However, the amount of U.S. Treasury Debt to be extinguished in exchange for at least 50% of GM common stock may vary. If 50% of our outstanding U.S. Treasury Debt at June 1, 2009 is extinguished for 51% of the pro forma GM common stock issued, it would result in a settlement loss of approximately $4.8 billion based on the debt levels assumed for the pro forma adjustments and the carrying value of the warrant.

 

     Likewise, the percentage of GM common shares to be issued to the New VEBA and the percentage of our obligation to the New VEBA to be settled through the VEBA Modifications is subject to change. However, unlike the shares to be issued in the exchange offers and in the U.S. Treasury Debt Conversion, these shares will not be issued until the Implementation Date and are therefore not reflected as being outstanding for purposes of the unaudited pro forma condensed consolidated financial information. For purposes of the unaudited pro forma condensed consolidated financial information for the exchange offers, it is assumed that 50% of our $20 billion in obligations will be reduced for 38% of the pro forma GM common stock and the difference between the current carrying value of the obligations subject to the VEBA Modifications ($10 billion) and the estimated fair value of the GM common stock to be provided on the Implementation Date ($9.8 billion) will be reflected as an actuarial gain of $0.2 billion. This is consistent with the accounting treatment followed when the VEBA settlement agreement was initially recognized in our 2008 financial statements and the actuarial gain will be recorded as part of accumulated other comprehensive loss. This actuarial gain would be subject to amortization with other net actuarial gains and losses pursuant to SFAS No. 106 over the remaining life expectancy of plan participants.

 

     The following reflects adjustments for the U.S. Treasury Debt Conversion and the VEBA Modifications:

 

(Dollars in millions)

   Amounts  

Decrease in existing U.S. Treasury Debt

   $ (8,227 )

Decrease in postretirement benefits other than pensions

     (242 )

Decrease in other liabilities and deferred income taxes, non-current for the extinguishment of the warrant

     (66 )

Decrease in accumulated other comprehensive loss

     (242 )

Increase in common stock (31.2 billion shares issued at $1 2/3 par value)

     51,936  

Decrease in capital surplus

     (38,848 )

Increase in accumulated deficit

     4,795  

 

     The pro forma adjustments above reflect a loss upon issuance of GM common stock in exchange for (a) full satisfaction and cancellation of 50% of our current outstanding U.S. Treasury Debt and (b) full satisfaction and cancellation of our obligations under the warrant granted to the U.S. Treasury. At the 50% participation level the fair value of the GM common stock issued to the U.S. Treasury exceeds the current carrying value of the converted U.S. Treasury Debt and carrying value of the warrant by $4.8 billion.

 

     The actual reduction amount in our obligations may be different than what we have assumed, and this difference may be material.

 

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     The following table sets forth an unaudited pro forma sensitivity analysis of the pro forma adjustments for the U.S. Treasury Debt Conversion and the VEBA Modifications to estimate the effect of cancellation of more than 50% of our outstanding U.S. Treasury Debt reflected in these pro forma financial statements and the reduction in our OPEB obligation at June 1, 2009 to reflect the extinguishment on the Implementation Date of more than 50% our $20 billion present value in unfunded obligations under the VEBA settlement agreement in exchange for approximately 89.9% of the pro forma GM common stock based on the Assumed Participation Level utilized for purposes of the unaudited pro forma financial statements.

 

        Pro Forma Decreases In Balance of:

% of U.S. Treasury
Debt and VEBA
obligations exchanged

  Assumed
share
price
  Short-term
borrowings
and
current
portion of
long-term
debt
  VEBA
obligations
due to the
actuarial
gain
  Stockholders’
deficit
  Interest
expense
for the
three
months
ended
March 31,
2009
  Interest
expense for
the year
ended
December 31,
2008
  Cost of
sales for
the three
months
ended
March 31,
2009
  Cost of sales
for the year
ended
December 31,
2008
(Dollars in millions,
except share price)
                               

100%

  $   0.72   $   16,455   $   3,177   $   19,632   $   598   $   1,182   $   450   $   600

90%

    0.66     14,809     2,590     17,399     538     1,064     405     540

80%

    0.60     13,164     2,003     15,167     478     945     360     480

70%

    0.54     11,518     1,416     12,934     418     827     315     420

60%

    0.48     9,873     829     10,702     358     709     270     360

50%

    0.42     8,227     242     8,469     299     591     225     300

 

     The value per share at the different participation levels increases as the economic benefit from the reduction in obligations shifts to the other stakeholders of GM. Further, the number of shares to be received by the U.S Treasury and New VEBA, combined, is the same at each level of participation. The reduction in the VEBA obligations above represents the difference between the current carrying value of the obligations subject to the VEBA Modifications and the estimated fair value of the GM common stock to be issued to the New VEBA on the Implementation Date and will be reflected as an actuarial gain. This is consistent with the accounting treatment followed when the VEBA settlement agreement was initially recognized in our 2008 financial statements and the actuarial gain will be recorded as part of accumulated other comprehensive loss.

 

     A 10% increase or decrease in the estimated per share fair value at the 50% participation level would result in an increase or decrease of approximately $1.3 billion in consideration to the U.S. Treasury in exchange for conversion of 50% of the U.S. Treasury Debt. This change would result in a $1.3 billion increased loss upon conversion at a 10% increase in per share value of the GM common stock and a $1.3 billion decreased loss upon conversion at a 10% decrease in per share value of the GM common stock. At the 50% participation level a fair value of approximately $0.26 per share before giving pro forma effect to the reverse stock split would provide the U.S. Treasury consideration equal to the $8.2 billion U.S. Treasury Debt assumed to be converted for purposes of the unaudited pro forma financial information.

 

     A 10% increase or decrease in the fair value of the GM common stock at the 50% participation level would result in an increase or decrease of approximately $1.0 billion in the consideration provided to the New VEBA in exchange for conversion of $10 billion of OPEB obligations.

 

     The fair value of the monetary consideration and GM common stock issued to the New VEBA will exceed the $20 billion we owe the New VEBA under the Settlement Agreement if the fair value of the GM common stock exceeds approximately $0.43 per share, assuming all other pro forma assumptions remain constant. Such excess would represent an increase in the funding to the New VEBA and would increase our unfunded OPEB obligation, which is currently measured based on our total expected contributions to the New VEBA and the assumption that our UAW hourly medical plan and mitigation plan will be settled on the Implementation Date. Therefore, our current unfunded OPEB obligation will change as a result of movement in our share price and such change may be significant.

 

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(p) To reflect the reduction in pro forma interest expense of $299 million for the three months ended March 31, 2009 and $591 million for the year ended December 31, 2008 as a result of the U.S. Treasury Debt Conversion at the assumed minimum 50% pro forma level.

 

(q) To reflect the reduction in expense related to postretirement benefits other than pensions costs of $225 million for the three months ended March 31, 2009 and $300 million for the year ended December 31, 2008 as a result of the VEBA Modifications at the assumed minimum 50% pro forma level. The $300 million adjustment for the year ended December 31, 2008 reflects the reduction of interest expense component of the VEBA costs from September 2, 2008, the date at which the settlement agreement with the UAW became effective.

 

(r) To reflect an increase for the three months ended March 31, 2009 to our equity income in GMAC by $13 million for the period from January 1, 2009 through January 16, 2009 resulting from our incremental ownership increase in GMAC. There is no net effect on our unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2008 related to our pro forma purchase as of January 1, 2008 of an additional 10.9% ownership interest in GMAC, increasing our common equity interest in GMAC from 49.0% to 59.9% using the proceeds from and as required by the Second U.S. Treasury Loan Agreement. In 2008, we recorded an impairment charge for our investment in GMAC to reduce the carrying value of our equity investment to its estimated fair value at December 31, 2008. Any additional equity income that would have been reflected in the unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2008 for our increased equity ownership would have been completely offset by an additional impairment charge. We continue to account for GMAC using the equity method of accounting.

 

(s) To eliminate the $99 million recorded in earnings in the three months ended March 31, 2009 related to the change in the estimated fair value of the warrant issued to the U.S. Treasury that is satisfied and cancelled as part of the U.S. Treasury Debt Conversion.

 

(t) To reflect the early settlement of certain derivative contracts that occurred subsequent to March 31, 2009 resulting in cash payments of $472 million in exchange for the settlement of such derivative contracts. The following table reflects the adjustments for the early settlement of the derivative contracts:

 

(Dollars in millions)    Amounts  

Cash settlement payments

   $   (472 )

Decrease in other current assets and deferred income taxes

     (46 )

Decrease in other assets

     (114 )

Decrease in accrued expenses

     (104 )

Decrease in other liabilities and deferred income taxes

     (175 )

Increase in accumulated deficit

     353  

 

     The recorded loss on settlement is reflected in accumulated deficit on the unaudited pro forma condensed consolidated balance sheet for the exchange offers.

We continue to assess our net derivative positions with certain counterparties, and are currently in negotiations with several counterparties, to settle additional contracts based on economic considerations. When such transactions are executed, they may result in an inflow or outflow of cash based on whether the net position is an asset or liability. The size of such additional cash flows could be substantial if the net derivative positions we choose to settle are large.

 

(u)

As disclosed in our quarterly report on Form 10-Q for the three months ended March 31, 2009, which is incorporated by reference into this prospectus, we continue to actively market certain assets for sale including our HUMMER brand and a transmission facility in Strasbourg, France. As part of our current Viability Plan, we accelerated the timing for a resolution to our strategic review of HUMMER to 2009 from 2010. With respect to HUMMER, we are actively marketing the brand and have received final bids from potential purchasers and are in the process of reviewing them. We expect to make a final decision regarding a sale or phase-out in May. As a result, our current Viability Plan does not contemplate production and sales

 

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to dealers of HUMMER products beyond 2009. However, there are no agreements in principle for these transactions and, accordingly, we have not given pro forma effect to such potential dispositions pursuant to the requirements for pro forma presentation under Article 11 of Regulation S-X. In addition, we do not believe the effects of these transactions would be material to our financial position or results of operations; however, with respect to HUMMER, a loss on sale or impairment estimated to be between $100 million and $500 million may be incurred if one of the alternatives being considered is consummated.

 

(v) As disclosed in our quarterly report on Form 10-Q for the three months ended March 31, 2009, which is incorporated by reference into this prospectus, we intend to phase out the retail channels and brands of Saturn Distribution Corporation, an indirect wholly-owned subsidiary, in order to reduce the number of our retail channels and the number of our core brands. As part of our current Viability Plan, we accelerated the timing for a resolution to our strategic review of Saturn to 2009 from 2010 to 2011. We are currently working with the Saturn Franchise Operations Team, to review opportunities regarding a potential sale of Saturn. If a sale of Saturn does not occur, we intend to phase out the Saturn brand by the end of 2009. As a result, our current Viability Plan does not comprehend production and sales to dealers of Saturn products beyond 2009. However, there are no agreements in principle for either of these transactions and, therefore, we have not given pro forma effect to such potential dispositions because they do not meet the requirements for pro forma presentation under Article 11 of Regulation S-X. In addition, we do not believe the effects of these transactions would be material to our financial position or results of operations.

 

(w) On March 30, 2009, the U.S. Government announced that it will create a warranty program pursuant to which a separate account will be created and funded with cash contributed by us and a loan from the U.S. Treasury to ensure the payment for repairs covered by our limited warranty obligations on each new vehicle sold by us during our restructuring period. We expect that the cash contribution and the loan from the U.S. Treasury will total 125% of the costs projected by us that are required to satisfy anticipated claims under the limited warranty obligations on those vehicles. We have agreed to participate in the program and to contribute a portion of the cash required to cover the projected costs of anticipated warranty claims for each vehicle covered by the program. We are still discussing with the U.S. Treasury the ultimate scope, structure, and terms of the U.S. Government warranty program and, therefore, have not included any pro forma adjustments related to the potential impact of this program because it does not meet the requirements for pro forma presentation pursuant to Article 11 of Regulation S-X. It is expected that this program could require us to borrow additional amounts from the U.S. Treasury.

 

(x) Our current Viability Plan does not contemplate further investment for Pontiac, and therefore the brand will be phased out by the end of 2010. This action is part of our broader reorganization under our current Viability Plan and, as noted above, we have not given pro forma effect to such phase out because it does not meet the requirements for pro forma presentation under Article 11 of Regulation S-X.

 

(y) Our current Viability Plan calls for fewer brands and a reduction in U.S. dealers, from 6,246 in 2008 to 3,605 in 2010. The Plan is intended to facilitate an orderly and cost-effective approach for these reductions and to minimize future losses related to disposal of dealer inventory. The brand and dealer reductions will likely result in significant costs, such as negotiated payments to dealers, vehicle incentives, auction losses, or the adverse effects arising from possible future declines in residual values, such as increases in risk-sharing payments to GMAC or impairment losses on vehicles under operating leases. The unaudited pro forma condensed consolidated financial information for the exchange offers does not give effect to the benefits or costs related to the reduction in brands or U.S. dealers contemplated in our current Viability Plan because such actions do not currently meet the requirements for pro forma presentation under Article 11 of Regulation S-X.

 

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PROCEDURE FOR TENDERING OLD NOTES

Holders of old notes who have already validly tendered their old notes pursuant to the exchange offers and who have not withdrawn such old notes do not need to take any further action to receive the exchange consideration on the settlement date.

Holders of old notes who wish to tender but have not yet done so should follow the instructions set forth in “The Exchange Offers and Consent Solicitations—Procedures for Tendering Old Notes” section of the original prospectus.

D.F. King & Co., Inc. has been appointed as Exchange Agent for the exchange offers. Questions and requests for assistance, and all correspondence in connection with the exchange offers, or requests for additional letters of transmittal and any other required documents, may be directed to the Exchange Agent at its addresses and telephone numbers set forth on the back cover of this prospectus supplement.

D.F. King & Co., Inc. has been appointed as Solicitation and Information Agent for the exchange offers and consent solicitations. The Solicitation and Information Agent will assist with the mailing of this prospectus supplement, the original prospectus and related materials to holders of old notes, respond to inquiries of, and provide information to, holders of old notes in connection with the exchange offers and consent solicitations, and provide other similar advisory services as we may request from time to time. Requests for additional copies of this prospectus supplement, the original prospectus, letters of transmittal and any other required documents may be directed to the Solicitation and Information Agent at its addresses and telephone numbers set forth on the back cover of this prospectus supplement.

 

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You should rely only on the information contained or incorporated by reference in the original prospectus, as supplemented by this prospectus supplement. Neither we nor the Dealer Managers have authorized any other person to provide you with different or additional information. If anyone provides you with different or additional information, you should not rely on it. We are not making an offer to sell securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information in this prospectus supplement is accurate as of the date appearing on the front cover of this prospectus supplement only. Our business, financial condition, results of operations and prospects may have changed since that date.

 

General Motors Corporation

 

Exchange Offers and Consent Solicitations for any and all of the Outstanding Notes set forth in the Original Prospectus

 

Questions, requests for assistance and requests for additional copies of this prospectus supplement or the original prospectus may be directed to the Exchange Agent and Solicitation and Information Agent at its addresses and telephone numbers set forth below:

 

The Global Coordinators for the exchange offers are:

 

MORGAN STANLEY   BANC OF AMERICA SECURITIES LLC

 

The Exchange Agent and Solicitation and Information Agent for the exchange offers is:

 

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, New York 10005

Banks and Brokers call: (212) 269-5550

All others call toll free: (800) 769-7666

Email: gm@dfking.com

 

D.F. King (Europe) Limited

One Ropemaker Street

London EC2Y 9HT

Banks and Brokers call: +44 20 7920 9700

All others call toll free: 00 800 5464 5464

Email: gm@dfking.com

 

The Settlement and Escrow Agent for the non-USD old notes is:

 

Deutsche Bank AG, London Branch

Deutsche Bank AG London

Winchester House

1 Great Winchester Street

London EC2N 2DB

Email: xchange.offer@db.com

 

The Luxembourg Exchange Agent for the exchange offers is:

 

Deutsche Bank Luxembourg, S.A.

2, Bld Konrad Adenauer

L-1115 Luxembourg

Email: xchange.offer@db.com

 

 


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LOGO

April 27, 2009

Dear GM Noteholder:

GM has developed a restructuring plan that we believe offers the best path for the future success of our company. As a key component of this plan, we are making an offer to you to exchange GM notes you own today for GM common stock.

We are soliciting your support for our exchange offers, which will allow GM to restructure out of bankruptcy court. The exchange offers are described in detail in the enclosed prospectus, which we encourage you to read fully.

The Exchange Offers

We are offering to issue 225 shares of GM common stock for each $1,000 principal amount of GM notes that you own and to pay to you in cash for all accrued but unpaid interest on your GM notes to the settlement date of the exchange offers.

We believe there are advantages to restructuring GM out of court through the exchange offers. We believe that the successful consummation of the exchange offers would, among other things:

 

   

enable us to continue operating our business without the negative impact that a bankruptcy could have on our relationships with our customers, employees, suppliers, dealers and others;

 

   

reduce the risk of a potentially precipitous decline in our revenues in a bankruptcy; and

 

   

allow us to complete our restructuring in less time and with less risk than any bankruptcy alternatives.

FOR THE EXCHANGE OFFERS TO BE SUCCESSFUL, WE NEED TO SATISFY SEVERAL CONDITIONS INCLUDING RECEIVING THE APPROVAL OF THE U.S. DEPARTMENT OF THE TREASURY, WHICH WE BELIEVE WILL REQUIRE, AMONG OTHER THINGS, TENDERS FROM APPROXIMATELY 90% OF THE OUTSTANDING GM NOTES ACROSS ALL SERIES.

Bankruptcy Relief

In the event that we do not receive prior to June 1, 2009 enough tenders of existing GM notes to consummate the exchange offers, we currently expect to seek relief under the U.S. Bankruptcy Code. This relief may include (i) seeking bankruptcy court approval for the sale of most or substantially all of our assets pursuant to section 363(b) of the U.S. Bankruptcy Code to a new operating company, and a subsequent liquidation of the remaining assets in the bankruptcy case; (ii) pursuing a plan of reorganization (where votes for the plan are solicited from certain classes of creditors prior to a bankruptcy filing) that we would seek to confirm (or “cram down”) despite the deemed rejection of the plan by noteholders; or (iii) seeking another form of bankruptcy relief, all of which involve uncertainties, potential delays and litigation risks. We are considering these alternatives in consultation with the U.S. Department of the Treasury, our largest lender.

If we seek bankruptcy relief, you may receive consideration that is less than what is being offered in the exchange offers and it is possible that you may receive no consideration at all for your GM notes.

Deadline for Participating

THE DEADLINE FOR PARTICIPATING IN THE EXCHANGE OFFERS IS TUESDAY, MAY 26, 2009. In order to allow sufficient time for processing, you must contact your broker, dealer, bank, trust company or other nominee significantly in advance of that date and request them to tender your GM notes in the exchange offers.

You must make your own decision as to whether to participate in the exchange offers. Neither we, our subsidiaries nor our or their respective boards of directors has made, nor will they make, any recommendation as to whether you should participate in the exchange offers.


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We urge you to carefully read the accompanying prospectus and the related letter of transmittal in their entirety, including the discussion of risks, uncertainties and other issues that you should consider with respect to the exchange offers described in the section entitled “Risk Factors.”

In order to satisfy certain conditions of the exchange offers, one of which is estimated to take up to three months to satisfy, the expiration date may be extended without extending the withdrawal deadline, as a result of which the exchange offers would remain open for a period of time during which you will not be able to withdraw any tendered old notes, except in limited circumstances as described in the accompanying prospectus.

Questions

If you have any questions or need any assistance in connection with the exchange offers, please contact D.F. King & Co., Inc., the Exchange Agent and Solicitation and Information Agent, at (800) 769-7666 (in North America) or 00-800-5464-5464 (in Europe).

We are respectfully requesting your consideration and thank you in advance for your support of this important transaction.

Sincerely,

LOGO

Kent Kresa

Chairman of the Board

LOGO

Frederick A. Henderson

Chief Executive Officer

 


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General Motors Corporation

 

$27,200,760,650

 

Exchange Offers and Consent Solicitations for any and all of the

Outstanding Notes set forth below

 

EACH OF THE EXCHANGE OFFERS (AS DEFINED BELOW) WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON MAY 26, 2009, UNLESS EXTENDED BY US (SUCH DATE AND TIME, AS THE SAME MAY BE EXTENDED, THE “EXPIRATION DATE”). WITH RESPECT TO ANY SERIES OF OLD NOTES (AS DEFINED BELOW), TENDERS MAY NOT BE WITHDRAWN AFTER 11:59 P.M., NEW YORK CITY TIME, ON MAY 26, 2009 (SUCH DATE AND TIME, AS THE SAME MAY BE EXTENDED, THE “WITHDRAWAL DEADLINE”), EXCEPT IN LIMITED CIRCUMSTANCES AS SET FORTH HEREIN.

 

Exchange Offers and Consent Solicitations

 

Upon the terms and subject to the conditions set forth in this prospectus and the related letter of transmittal (or form of electronic instruction notice, in the case of old notes held through Euroclear or Clearstream), as each may be amended from time to time, General Motors Corporation (“GM”) is offering to exchange (the “exchange offers”) 225 shares of GM common stock (as defined below) for each 1,000 U.S. dollar equivalent of principal amount (or accreted value as of the settlement date (as defined below), if applicable) of outstanding notes of each series set forth in the summary offering table on the inside front cover of this prospectus (the “old notes”), resulting in an aggregate offer of up to approximately 6.1 billion new shares of GM common stock, assuming full participation in the exchange offers. In respect of the exchange offers for the old GM Nova Scotia notes (as defined below), General Motors Nova Scotia Finance Company (“GM Nova Scotia”) is jointly making the exchange offers with GM. In addition, (a) GM will pay, in cash, accrued interest on the old GM notes (as defined below), other than the discount notes (as defined below) and (b) GM Nova Scotia will pay, in cash, accrued interest on the old GM Nova Scotia notes, in each case, from and including the most recent interest payment date to, but not including, the settlement date.

 

(Cover continued on next page)

 

 

 

GM’s common stock is listed on the New York Stock Exchange under the symbol “GM.”

 

 

 

 

See “Risk Factors” beginning on page 36 for a discussion of issues that you should consider with respect to the exchange offers and consent solicitations, as well as our Viability Plan and business.

 

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities being offered in exchange for the old notes or this transaction, passed upon the merits or fairness of this transaction or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

 

 

Global Coordinators

 

MORGAN STANLEY    BANC OF AMERICA SECURITIES LLC

 

 

U.S. Lead Dealer Managers   Non-U.S. Lead Dealer Managers
CITI   J.P. MORGAN   BARCLAYS CAPITAL   DEUTSCHE BANK SECURITIES

 

Dealer Managers

 

UBS INVESTMENT BANK   WACHOVIA SECURITIES

 

 

 

The date of this prospectus is April 27, 2009


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Concurrently with the exchange offers, we are soliciting consents (the “consent solicitations”) from the holders of old notes to amend (the “proposed amendments”) the terms of the debt instruments that govern each series of old notes. Under these proposed amendments (a) the material covenants and events of default other than the obligation to pay principal and interest on the old notes would be removed and (b) an early call option (the “call option”) would be added in each series of non-USD old notes (as defined below), which we would exercise to redeem any non-tendered non-USD old notes for the exchange consideration offered pursuant to the exchange offers (i.e., 225 shares of GM common stock per 1,000 U.S. dollar equivalent of principal amount of non-USD old notes). Except for holders who tender non-USD old notes prior to the date on which the registration statement of which this prospectus forms a part is declared effective, holders may not tender their old notes pursuant to the exchange offers without delivering consents to the proposed amendments, and holders may not deliver consents to the proposed amendments pursuant to the consent solicitations without tendering their old notes.

 

In addition, by tendering, and not validly withdrawing, their 1.50% Series D Convertible Debentures due June 1, 2009 (the “old Series D notes”), holders of old Series D notes will irrevocably agree, in the event the exchange offers are extended beyond June 1, 2009, to extend the maturity of their old Series D notes and to forbear from taking any action to enforce, or direct enforcement of, and to waive any and all of the rights and remedies available to such holders under such old Series D notes or the indenture governing such old Series D notes, in each case until the earlier of (a) the termination of the exchange offers (including in the event GM files a petition for relief under the U.S. Bankruptcy Code) and (b) the consummation of the exchange offers (the date of such earlier event, the “Forbearance, Waiver and Extension Termination Date”).

 

Bankruptcy Relief

 

In the event that we do not receive prior to June 1, 2009 enough tenders of old notes, including the old Series D notes, to consummate the exchange offers, we currently expect to seek relief under the U.S. Bankruptcy Code. This relief may include (i) seeking bankruptcy court approval for the sale of most or substantially all of our assets pursuant to section 363(b) of the U.S. Bankruptcy Code to a new operating company, and a subsequent liquidation of the remaining assets in the bankruptcy case; (ii) pursuing a plan of reorganization (where votes for the plan are solicited from certain classes of creditors prior to a bankruptcy filing) that we would seek to confirm (or “cram down”) despite the deemed rejection of the plan by the class of holders of old notes; or (iii) seeking another form of bankruptcy relief, all of which involve uncertainties, potential delays and litigation risks. We are considering these alternatives in consultation with the U.S. Department of the Treasury (the “U.S. Treasury”), our largest lender.

 

If we seek bankruptcy relief, holders of old notes may receive consideration that is less than what is being offered in the exchange offers, and it is possible that such holders may receive no consideration at all for their old notes.

 

The exchange offers are conditioned on, among other things, the requirement (the “U.S. Treasury Condition”) that the results of the exchange offers shall be satisfactory to the U.S. Treasury, including in respect of the overall level of participation by holders in the exchange offers and in respect of the level of participation by holders of the old Series D notes in the exchange offers. We currently believe, and our Viability Plan (as defined below) assumes, that at least 90% of the aggregate principal amount (or, in the case of discount notes, accreted value) of the outstanding old notes (including at least 90% of the aggregate principal amount of the outstanding old Series D notes) (the “Assumed Participation Level”) will need to be tendered in the exchange offers or called for redemption pursuant to the call option (in the case of the non-USD old notes) in order for the exchange offers to satisfy the U.S. Treasury Condition. Whether this level of participation in the exchange offers will be required (or sufficient) to satisfy the U.S. Treasury Condition will ultimately be determined by the U.S. Treasury. The actual level of participation in the exchange offers may be different than what we have assumed, and this difference may be material.

 

You must make your own investment decision as to whether to exchange any old notes pursuant to the exchange offers and grant your consent to the proposed amendments in the consent solicitations. None of GM, its subsidiaries (including GM Nova Scotia), their respective boards of directors, the Dealer Managers, the Solicitation and Information Agent, the Settlement and Escrow Agent, the Luxembourg Exchange Agent or the Exchange Agent (each as defined below), or such parties’ agents, advisors or counsel, has made, or will make, any recommendation as to whether holders should exchange their old notes and grant their consent to the proposed amendments.

 

The securities being offered in exchange for the old notes are being offered and will be issued outside the United States only to holders who are “non-U.S. qualified offerees” (as defined in the “Non-U.S. Offer Restrictions” section of this prospectus). Offers to holders in the United Kingdom, Austria, Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Spain and Switzerland will be made only pursuant to a separate prospectus approved by the United Kingdom Listing Authority (“UKLA”) as competent authority under EU Directive 2003/71/EC (the “EU Approved Prospectus”), which will incorporate this prospectus and will indicate on the front cover thereof that it can be used for such offers. Holders outside of these jurisdictions (and the United States) are authorized to participate in the exchange offers and consent solicitations, as described in the “Non-U.S. Offer Restrictions” section of this prospectus. If you are outside of the above jurisdictions (and the United States and Canada), you are only authorized to receive the EU Approved Prospectus. If you are in Canada you are only authorized to receive and review a separate Canadian offering memorandum prepared in accordance with applicable Canadian securities laws (the “Canadian Offering Memorandum”), which will incorporate this prospectus.


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Summary Offering Table

This summary offering table identifies each series of old notes subject to the exchange offers. The exchange consideration to be offered in the exchange offers consists of 225 shares of GM common stock per 1,000 U.S. dollar equivalent principal amount or, in the case of the 7.75% discount debentures due March 15, 2036 of GM (the “discount notes”), accreted value, of old notes as of the settlement date (the “exchange consideration”). In addition, (a) GM will pay, in cash, accrued interest on the old GM notes, other than the discount notes and (b) GM Nova Scotia will pay, in cash, accrued interest on the old GM Nova Scotia notes, in each case, from and including the most recent interest payment date to, but not including, the settlement date.

 

CUSIP/ISIN

  Outstanding
Principal Amount
  

Title of Notes
to be Tendered

  

Applicable Debt
Instrument (3)

  

Shares of GM
Common Stock
Offered per
1,000 U.S. Dollar
Equivalent (4)

   Accrued Interest
per 1,000 U.S.
Dollar Equivalent
as of June 30,
2009 (7)
 
USD Old Notes  
370442691   USD 1,001,600,875   

1.50% Series D Convertible Senior Debentures due June 1, 2009 (2)

   1995 Indenture    225    $   7.50 (8)
370442BB0   USD 1,500,000,000   

7.20% Notes due January 15, 2011

   1995 Indenture    225    $ 33.00  
37045EAS7   USD 48,175,000   

9.45% Medium-Term Notes due November 1, 2011

   1990 Indenture    225    $ 11.81  
370442BS3   USD 1,000,000,000   

7.125% Senior Notes due July 15, 2013

   1995 Indenture    225    $ 32.66  
370442AU9   USD 500,000,000   

7.70% Debentures due April 15, 2016

   1995 Indenture    225    $ 16.04  
370442AJ4   USD 524,795,000   

8.80% Notes due March 1, 2021

   1990 Indenture    225    $ 29.09  
37045EAG3   USD 15,000,000   

9.4% Medium-Term Notes due
July 15, 2021

   1990 Indenture    225    $ 11.75  
370442AN5   USD 299,795,000   

9.40% Debentures due July 15, 2021

   1990 Indenture    225    $ 43.08  
370442BW4   USD 1,250,000,000   

8.25% Senior Debentures due
July 15, 2023

   1995 Indenture    225    $ 37.81  
370442AV7   USD 400,000,000   

8.10% Debentures due June 15, 2024

   1995 Indenture    225    $ 43.88 (9)
370442AR6   USD 500,000,000   

7.40% Debentures due
September 1, 2025

   1990 Indenture    225    $ 24.46  
370442AZ8   USD 600,000,000   

6 3/4% Debentures due May 1, 2028

   1995 Indenture    225    $ 11.06  
370442741   USD 39,422,775   

4.50% Series A Convertible Senior Debentures due March 6, 2032 (2)

   1995 Indenture    225    $ 14.88  
370442733   USD 2,600,000,000   

5.25% Series B Convertible Senior Debentures due March 6, 2032 (2)

   1995 Indenture    225    $ 17.35  
370442717   USD 4,300,000,000   

6.25% Series C Convertible Senior Debentures due July 15, 2033 (2)

   1995 Indenture    225    $ 28.65  
370442BT1   USD 3,000,000,000   

8.375% Senior Debentures due
July 15, 2033

   1995 Indenture    225    $ 38.39  
370442AT2   USD 377,377,000 (1)   

7.75% Discount Debentures due
March 15, 2036

   1995 Indenture    225      n/a  
370442816   USD 575,000,000   

7.25% Quarterly Interest Bonds due
April 15, 2041

   1995 Indenture    225    $ 15.10  
370442774   USD 718,750,000   

7.25% Senior Notes due July 15, 2041

   1995 Indenture    225    $ 15.10  
370442121   USD 720,000,000   

7.5% Senior Notes due July 1, 2044

   1995 Indenture    225    $ 18.54  
370442725   USD 1,115,000,000   

7.375% Senior Notes due May 15, 2048

   1995 Indenture    225    $   9.22  
370442BQ7   USD 425,000,000   

7.375% Senior Notes due May 23, 2048

   1995 Indenture    225    $   7.58  
370442766   USD 690,000,000   

7.375% Senior Notes due
October 1, 2051

   1995 Indenture    225    $ 18.23  
370442758   USD 875,000,000   

7.25% Senior Notes due
February 15, 2052

   1995 Indenture    225    $   9.06  
Euro Old Notes  
XS0171942757   EUR 1,000,000,000   

7.25% Notes due July 3, 2013

  

July 3, 2003 FPAA

       225(5)      $71.81 (10)
XS0171943649   EUR 1,500,000,000   

8.375% Notes due July 5, 2033

  

July 3, 2003 FPAA

       225(5)      $82.49 (11)
Old GM Nova Scotia Notes  
XS0171922643   GBP 350,000,000   

8.375% Guaranteed Notes due December 7, 2015

  

July 10, 2003 FPAA

       225(6)    $ 47.02 (12)
XS0171908063   GBP 250,000,000   

8.875% Guaranteed Notes due
July 10, 2023

  

July 10, 2003 FPAA

       225(6)    $ 86.20 (13)


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(1) Represents the principal amount at maturity. The exchange consideration offered to holders of discount notes will be based on the accreted value thereof as of the settlement date. As of June 30, 2009, the accreted value of the discount notes will be $568.94 per $1,000 principal amount at maturity thereof.

 

(2) Denotes convertible old notes.

 

(3) The debt instruments governing the old notes are the (a) Indenture dated as of November 15, 1990 between GM and Wilmington Trust Company, as Successor Trustee (the “1990 Indenture”); (b) Indenture dated as of December 7, 1995 between GM and Wilmington Trust Company, as Successor Trustee (the “1995 Indenture”); (c) Fiscal and Paying Agency Agreement dated as of July 3, 2003 among GM, Deutsche Bank AG London and Banque Générale du Luxembourg S.A. (the “July 3, 2003 FPAA”); and (d) Fiscal and Paying Agency Agreement dated as of July 10, 2003 among General Motors Nova Scotia Finance Company, GM, Deutsche Bank Luxembourg S.A. and Banque Générale du Luxembourg S.A. (the “July 10, 2003 FPAA”), in each case as amended or supplemented prior to the date of this prospectus.

 

(4) As described under “Description of the Charter Amendments,” prior to the distribution of GM common stock to tendering holders on the settlement date we intend to effect a 1-for-100 reverse stock split (the “reverse stock split”) of GM common stock. Unless otherwise indicated, all share numbers contained in this prospectus related to the exchange offers are presented without giving effect to the reverse stock split. We do not intend to issue fractional shares in connection with the exchange offers or the reverse stock split. Where, in connection with the exchange offers or as a result of the reverse stock split, a tendering holder of old notes would otherwise be entitled to receive a fractional share of GM common stock, the number of shares of GM common stock to be received by such holder will be rounded down to the nearest whole number and no cash or other consideration will be delivered to such holder in lieu of such rounded down amount. For example, 1,000 U.S. dollar equivalent amount of old notes would be exchanged for 225 shares of GM common stock, which would be converted to 2 shares of GM common stock after the reverse stock split and the rounding down of fractional shares occur. 3,000 U.S. dollar equivalent amount of old notes would be exchanged for 675 shares of GM common stock, which would be converted to 6 shares of GM common stock after the reverse stock split and the rounding down of fractional shares occur.

 

(5) Equivalent to approximately 292.8 shares of GM common stock per EUR 1,000 principal amount of Euro old notes, based on an exchange rate in effect on April 22, 2009 of EUR 1.00 = $1.30145. For purposes of determining the exchange consideration to be received in exchange for Euro old notes, an equivalent U.S. dollar principal amount of each tender of such Euro old notes will be used. See “The Exchange Offers and Consent Solicitations—Terms of the Exchange Offers.”

 

(6) Equivalent to approximately 327.1 shares of GM common stock per GBP 1,000 principal amount of old GM Nova Scotia notes, based on an exchange rate in effect on April 22, 2009 of GBP 1.00 = $1.45370. For purposes of determining the exchange consideration to be received in exchange for old GM Nova Scotia notes, an equivalent U.S. dollar principal amount of each tender of such old GM Nova Scotia notes will be used. See “The Exchange Offers and Consent Solicitations—Terms of the Exchange Offers.”

 

(7) For illustrative purposes only. The amount of accrued interest payable on the settlement date in respect of tendered old notes, other than the discount notes, will be the amount of accrued interest on such old notes from and including the most recent interest payment date to, but not including, the settlement date. We do not expect to consummate the exchange offers prior to June 30, 2009 because the satisfaction of certain conditions to the exchange offers is expected to require a significant period of time.

 

(8) Represents accrued interest per $1,000 principal amount as of June 1, 2009.

 

(9) Represents accrued interest on such old notes from and including December 15, 2008. Such amount does not reflect, and has not been reduced for, the interest payment scheduled for June 15, 2009.

 

(10) Equivalent to EUR 71.81 per EUR 1,000 principal amount of Euro old notes. Accrued interest on the Euro old notes payable on the settlement date will be paid in Euro.

 

(11) Equivalent to EUR 82.49 per EUR 1,000 principal amount of Euro old notes. Accrued interest on the Euro old notes payable on the settlement date will be paid in Euro.

 

(12) Equivalent to GBP 47.02 per GBP 1,000 principal amount of old GM Nova Scotia notes. Accrued interest on the old GM Nova Scotia notes payable on the settlement date will be paid in pounds sterling.

 

(13) Equivalent to GBP 86.20 per GBP 1,000 principal amount of old GM Nova Scotia notes. Accrued interest on the old GM Nova Scotia notes payable on the settlement date will be paid in pounds sterling.


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For purposes of this prospectus:

 

   

the terms “GBP” and “pounds sterling” refer to the currency of the United Kingdom;

 

   

the terms “EUR” and “Euro” refer to the single currency introduced at the start of the third stage of the European Economic and Monetary Union pursuant to the Treaty establishing the European Economic Community, as amended;

 

   

the term “offered securities” relates to the securities being offered pursuant to this prospectus;

 

 

 

the terms “our common stock” and “GM common stock” refer to the shares of common stock of GM, par value $1 2/3 per share, or upon adoption of the charter amendments described herein, par value $0.01 per share;

 

   

the term “USD old notes” refers to each series of old notes listed under the “USD Old Notes” subheading in the summary offering table above;

 

   

the term “Euro old notes” refers to each series of old notes listed under the “Euro Old Notes” subheading in the summary offering table above;

 

   

the term “old GM notes” refers to the USD old notes and the Euro old notes;

 

   

the term “old GM Nova Scotia notes” refers to each series of old notes listed under the “Old GM Nova Scotia Notes” subheading in the summary offering table above;

 

   

the term “non-USD old notes” refers to the Euro old notes and the old GM Nova Scotia notes;

 

   

the term “convertible old notes” refers to the USD old notes denoted as such in the summary offering table above; and

 

   

the term “amended Series D notes” refers to the old Series D notes subject to the Forbearance, Waiver and Extension.


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Important Dates

Holders of old notes should take note of the following important dates in connection with the exchange offers:

 

Date

  

Calendar Date and Time

  

Event

Withdrawal Deadline

   11:59 p.m., New York City time, on May 26, 2009, unless extended by us. In no event will the withdrawal deadline occur prior to the date on which the registration statement of which this prospectus forms a part is declared effective.    Deadline for holders of old notes to validly withdraw tenders of old notes. Old notes tendered and not validly withdrawn prior to the withdrawal deadline may not be withdrawn at any time thereafter, except in certain circumstances described herein.

Expiration Date

  

11:59 p.m., New York City time, on May 26, 2009, unless extended by us.

 

In order to satisfy certain conditions of the exchange offers, one of which is estimated to take up to three months to satisfy, the expiration date may be extended without extending the withdrawal deadline, as a result of which the exchange offers would remain open for a period of time during which you will not be able to withdraw any tendered old notes, except in limited circumstances as described herein.

   The last day for holders to tender their old notes in the exchange offers.

Settlement Date

  

Promptly following the applicable expiration date of each exchange offer, subject to satisfaction or waiver of all conditions precedent to the exchange offers. We do not expect to consummate the exchange offers prior to June 30, 2009 for the reasons described above.

 

   The exchange consideration that a tendering holder is entitled to pursuant to the exchange offers will be paid on the settlement date.

 


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Requests for Assistance

To participate in the exchange offers and consent solicitations, you should contact your broker, bank or other nominee or custodian and instruct it to tender your old notes and consent prior to the expiration date. You may have been provided with a letter of instructions along with this prospectus that may be used by you to instruct a broker, bank or other nominee or custodian to effect the tender of old notes for exchange and consent to the proposed amendments on your behalf. See “The Exchange Offers and Consent Solicitations—Procedures for Tendering Old Notes” for more information.

If you have questions or need assistance in connection with the exchange offers or consent solicitations, or require additional letters of transmittal and any other required documents, you may contact D.F. King & Co., Inc., the Exchange Agent and Solicitation and Information Agent, at the address and telephone numbers set forth on the back cover of this prospectus.

 

 


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TABLE OF CONTENTS

 

     Page

Where You Can Find More Information

   i

Incorporation of Certain Documents By Reference

   i

Cautionary Note Regarding Forward-Looking Statements

   ii

Notice to Investors

   v

Important Information

   vii

Questions and Answers About the Exchange Offers and Consent Solicitations

   ix

Summary

   1

Risk Factors

   36

Ratio of Earnings to Fixed Charges

   62

Use of Proceeds

   62

Price Range of Common Stock, Convertible Notes and Dividend Policy

   63

Capitalization

   65

The Restructuring

   67

Bankruptcy Relief

   79

Selected Consolidated Historical Financial Data

   80

Accounting Treatment of the Exchange Offers

   82

Unaudited Pro Forma Condensed Consolidated Financial Information for the Exchange Offers

   83

The Exchange Offers and Consent Solicitations

   102

Proposed Amendments

   115

Comparison of Old Notes Versus the Amended Old Notes

   128

Dealer Managers, Exchange Agent, Solicitation and Information Agent, the Settlement and Escrow Agent and Luxembourg Exchange Agent

   131

Description of General Motors Nova Scotia Finance Company

   134

Description of Amended Series D Notes

   135

Description of Certain Other Material Indebtedness

   148

Description of Our Capital Stock

   155

Description of The Charter Amendments

   160

Material United States Federal Income Tax Considerations

   162

Material Canadian Federal Income Tax Considerations

   174

Non-U.S. Offer Restrictions

   176

Legal Matters

   181

Experts

   181

Delivery of Letters of Transmittal

   182

Annex A

   A-1

Annex B

   B-1


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WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). In addition, we have filed with the SEC various communications related to the exchange offers described in this prospectus pursuant to Rule 425 under the Securities Act of 1933, as amended (the “Securities Act”). We strongly encourage you to read the relevant communications related to the exchange offers that have been filed with the SEC. You may read and copy any document that we file at the Public Reference Room of the SEC at 100 F Street, N.E., Room 1580, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an internet site at www.sec.gov from which you may obtain copies of reports, proxy statements, communications related to the exchange offers and other information regarding registrants that file electronically, including GM. We are not incorporating the contents of the SEC website into this prospectus.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The SEC allows us to “incorporate by reference” certain information that we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below which have been filed (not furnished) with the SEC and any future reports filed with the SEC by us under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) until the exchange offers are consummated, and such documents form an integral part of this prospectus:

 

GM SEC Filings (File No. 1-43)

 

Filing Date

Annual Report on Form 10-K for the fiscal year ended December 31, 2008

  March 5, 2009

Current Reports on Form 8-K and Form 8-K/A

  January 7, 2009, January 23, 2009, February 3, 2009, February 10, 2009, February 18, 2009, February 23, 2009, March 10, 2009, March 18, 2009, March 19, 2009, April 2, 2009 (with respect to Items 1.01, 5.02 and 9.01) and April 24, 2009
The description of GM common stock set forth in Article Four of GM’s Certificate of Incorporation filed as Exhibit 3(i) to our Annual Report on Form 10-K for the fiscal year ended December 31, 2003   March 11, 2004

You may request a copy of the documents incorporated by reference into this prospectus, except exhibits to such documents unless those exhibits are specifically incorporated by reference in such documents, at no cost, by writing or telephoning the office of Nicholas S. Cyprus, Controller and Chief Accounting Officer, at the following address and telephone number:

General Motors Corporation 300 Renaissance Center Detroit, Michigan 48265-3000 (313) 556-5000

In order to ensure timely delivery of documents, holders must request this information no later than five business days before the date they must make their investment decision. Accordingly, any request for documents should be made by May 18, 2009 to ensure timely delivery of the documents prior to the expiration date.

You may also find additional information about us, including the documents described above, on our website at http://www.gm.com. The information included on or linked to this website or any website referred to in any document incorporated by reference into this prospectus is not a part of this prospectus.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus may include or incorporate by reference “forward-looking statements.” Our use of the words “may,” “will,” “would,” “could,” “should,” “believes,” “estimates,” “projects,” “potential,” “expects,” “plans,” “seeks,” “intends,” “evaluates,” “pursues,” “anticipates,” “continues,” “designs,” “impacts,” “forecasts,” “target,” “outlook,” “initiative,” “objective,” “designed,” “priorities,” “goal” or the negative of those words or other similar expressions is intended to identify forward-looking statements. All statements in this prospectus (including statements incorporated by reference), other than statements of historical facts, including statements about future events or financial performance, are forward-looking statements that involve certain risks and uncertainties.

These statements are based on certain assumptions and analyses made in light of our experience and perception of historical trends, current conditions and expected future developments as well as other factors that we believe are appropriate in the circumstances. While these statements represent our current judgment on what the future may hold, and we believe these judgments are reasonable, these statements are not guarantees of any events or financial results. Whether actual future results and developments will conform with our expectations and predictions is subject to a number of risks and uncertainties, including the risks and uncertainties discussed under the caption “Risk Factors” herein and in documents incorporated by reference into this prospectus and other factors such as the following, many of which are beyond our control:

With respect to us:

 

   

our ability to continue as a “going concern”;

 

   

our ability to comply with the requirements of certain loan and security agreements, dated December 31, 2008 (the “First U.S. Treasury Loan Agreement”) and January 16, 2009 (the “Second U.S. Treasury Loan Agreement”), each between us, the U.S. Treasury and, with respect to the First U.S. Treasury Loan Agreement, certain of our domestic subsidiaries, and that certain promissory note, dated as of December 31, 2008, due December 30, 2011, issued by us to the U.S. Treasury with the approximate principal amount of $749 million (the “U.S. Treasury Promissory Note” and, together with the First U.S. Treasury Loan Agreement and the Second U.S. Treasury Loan Agreement (and any amendments thereto or additional promissory notes issued in connection therewith), the “U.S. Treasury Loan Agreements”) and to restructure our operations on the terms, within the timeframe and pursuant to the approval procedures contemplated by the U.S. Treasury Loan Agreements;

 

   

our ability to take actions management believes are important to our long-term strategy, including our ability to enter into certain material transactions outside of the ordinary course of business, due to significant representations and affirmative and negative covenants in the U.S. Treasury Loan Agreements;

 

   

our ability to maintain adequate liquidity to fund our planned significant investment in new technology, and, even if funded, our ability to realize successful vehicle applications of new technology;

 

   

the ability of counterparties to various financing arrangements, joint venture arrangements, commercial contracts and other arrangements to which we and our subsidiaries are party, to exercise rights and remedies under such arrangements, which, if exercised, may have material adverse consequences;

 

   

the impact of business or liquidity difficulties for us or one or more subsidiaries on other entities in our corporate group as a result of our highly integrated and complex corporate structure and operation;

 

   

our ability to obtain certification that we have taken all steps necessary to achieve and sustain our goals in accordance with our Viability Plan, as required by the U.S. Treasury Loan Agreements;

 

   

our ability to realize production efficiencies and to achieve reductions in costs as a result of our Viability Plan and the Labor Modifications (as defined below);

 

   

our ability to restore consumers’ confidence in our viability as a continuing entity and our ability to continue to attract customers, particularly for our new products, including cars and crossover vehicles;

 

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availability of adequate financing on acceptable terms to our customers, dealers, distributors and suppliers to enable them to continue their business relationships with us;

 

   

financial viability and ability to borrow of our key suppliers, including Delphi Corporation’s (“Delphi”) ability to address its underfunded pension plans and to emerge from bankruptcy proceedings;

 

   

our ability to sell, spin-off or phase out some of our brands as planned, to manage the distribution channels for our products and to complete other planned asset sales;

 

   

our ability to qualify for federal funding of our advanced technology vehicle programs under Section 136 of Energy Independence Security Act of 2007 (“EISA”);

 

   

the ability of our foreign operations to successfully restructure and receive adequate financial support from their host governments or other sources;

 

   

the continued availability of both wholesale and retail financing from GMAC LLC (“GMAC”) and its affiliates in the United States, Canada and the other markets in which we operate to support our ability to sell vehicles in those markets, which is dependent on GMAC’s ability to obtain funding and which may be suspended by GMAC if GMAC’s credit exposure to us exceeds certain limitations provided in our operating arrangements with GMAC;

 

   

overall strength and stability of general economic conditions and of the automotive industry, both in the United States and in global markets;

 

   

our ability to maintain adequate liquidity and financing sources and an appropriate level of debt;

 

   

continued economic and automotive industry instability or poor economic conditions in the United States and global markets, including the credit markets, or changes in economic conditions, commodity prices, housing prices, foreign currency exchange rates or political stability in the markets in which we operate;

 

   

shortages of and increases or volatility in the price of fuel;

 

   

market acceptance of our new products, including cars and crossover vehicles;

 

   

significant changes in the competitive environment, including as a result of industry consolidation, and the effect of competition in our markets, including on our pricing policies or use of incentives;

 

   

the ongoing ability of our suppliers to provide systems, components and parts without disruption;

 

   

changes in the existing, or the adoption of new, laws, regulations, policies or other activities of governments, agencies and similar organizations where such actions may affect the production, licensing, distribution or sale of our products, the cost thereof or applicable tax rates;

 

   

costs and risks associated with litigation;

 

   

significant increases in our pension and other postretirement benefit (“OPEB”) expenses resulting from changes in the value of plan assets;

 

   

changes in accounting principles, or their application or interpretation, and our ability to make estimates and the assumptions underlying the estimates, including the estimates for Delphi pension benefit guarantees, which could have an effect on earnings;

 

   

negotiations and bankruptcy court actions with respect to Delphi’s obligations to us and our obligations to Delphi, negotiations with respect to our obligations under the benefit guarantees to Delphi employees and our ability to recover any indemnity claims against Delphi;

 

   

changes in relations with unions and employees/retirees and the legal interpretations of the agreements with those unions with regard to employees/retirees, including negotiations pursuant to the terms of the U.S. Treasury Loan Agreements and the negotiation of new collective bargaining agreements with unions representing our employees in the United States;

 

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the effect of ongoing speculation on our business as to whether we will be able to reorganize outside of a bankruptcy proceeding and the impact on our business if we reorganize within a bankruptcy proceeding; and

 

   

other risks described from time to time in periodic and current reports that we file with the SEC.

In addition, actual results for GMAC (of which we currently own approximately 59.9% and which provides a significant amount of financing to our customers and dealers) may differ materially due to numerous important factors, including the following:

 

   

rating agencies may downgrade their ratings of GMAC or one of its principal subsidiaries, Residential Capital, LLC, in the future, which would adversely affect GMAC’s ability to raise capital in the debt markets at attractive rates and increase the interest that it pays on its outstanding publicly traded notes, which could have a material adverse effect on its results of operations and financial condition;

 

   

GMAC’s business requires substantial capital, and if it is unable to maintain adequate financing sources, its profitability and financial condition will suffer and jeopardize its ability to continue operations;

 

   

the profitability and financial condition of GMAC’s operations are dependent upon our operations, and it has substantial credit exposure to us;

 

   

recent developments in the residential mortgage market, especially in the nonprime sector, have and may continue to adversely affect GMAC’s revenues, profitability and financial condition;

 

   

changes in the competitive markets in which GMAC operates, including increased competition in the automotive financing, mortgage and/or insurance markets or generally in the markets for securitizations or asset sales, could have a material adverse effect on GMAC’s margins;

 

   

GMAC’s ability to realize the expected benefits of its recent conversion to a bank holding company and to comply with the increased regulation and restrictions to which it is subject as a result;

 

   

changes in the existing, or the adoption of new, laws, regulations, policies or other activities of governments, agencies and similar organizations; and

 

   

other risks described from time to time in documents incorporated by reference into this prospectus and in periodic and current reports that GMAC files with the SEC.

All of the forward-looking statements made in this prospectus, any prospectus supplement and the documents incorporated by reference into this prospectus are qualified by these cautionary statements and there can be no assurance that the actual results or developments that we anticipate will be realized or, even if realized, that they will have the expected consequences to or effects on us and our subsidiaries or our businesses or operations. We therefore caution investors not to rely unduly on forward-looking statements. We undertake no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events, or other such factors that affect the subject of these statements, except where we are expressly required to do so by law.

This prospectus contains, or incorporates by reference, descriptions of certain material agreements of GM. These agreements contain representations and warranties made by and to the parties thereto as of specific dates. The representations and warranties of each party set forth in such agreements were negotiated between the parties for the purpose of setting forth their rights and obligations regarding their respective agreements. In addition, such representations and warranties (1) may have been qualified by confidential disclosures made to the other party in connection with such agreements, although such confidential information does not contain information the securities laws require to be publicly disclosed, (2) may be subject to a materiality standard which may differ from what may be viewed as material by investors, (3) were made only as of the date of such agreements or such other date as is specified therein and (4) may have been included in such agreements for the purpose of allocating risk between or among the parties thereto rather than establishing matters of fact. The summaries of these material agreements included in this prospectus, and the agreements incorporated by reference herein, provide information regarding the terms thereof and should be considered in light of the entirety of public disclosure about GM as set forth in all of its public reports and filings with the SEC.

 

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NOTICE TO INVESTORS

This prospectus does not constitute an offer to participate in the exchange offers and consent solicitations to any person in any jurisdiction where it is unlawful to make such offers or solicitations. The exchange offers and consent solicitations are being made on the basis of this prospectus and are subject to the terms described herein. Any decision to participate in the exchange offers and consent solicitations should be based on the information contained in this prospectus or specifically incorporated by reference herein. In making an investment decision, prospective investors must rely on their own examination of us and the terms of the exchange offers and consent solicitations and the offered securities, including the merits and risks involved. Prospective investors should not construe anything in this prospectus as legal, business or tax advice. Each prospective investor should consult its advisors as needed to make its investment decision and to determine whether it is legally permitted to participate in the exchange offers and consent solicitations under applicable legal investment or similar laws or regulations.

Each prospective investor must comply with all applicable laws and regulations in force in any jurisdiction in which it participates in the exchange offers and consent solicitations or possesses or distributes this prospectus and must obtain any consent, approval or permission required by it for participation in the exchange offers and consent solicitations under the laws and regulations in force in any jurisdiction to which it is subject, and neither we nor the Dealer Managers nor any of our or their respective representatives shall have any responsibility therefor.

In connection with the exchange offers or otherwise, the Dealer Managers may, subject to applicable law, purchase and sell old notes or the offered securities in the open market. These transactions may include covering transactions and stabilizing transactions. Any of these transactions may have the effect of preventing or retarding a decline in the market prices of the old notes and/or the offered securities. They may also cause the prices of the old notes and/or the offered securities to be higher than the prices that otherwise would exist in the open market in the absence of these transactions. The Dealer Managers may conduct these transactions in the over-the-counter market or otherwise. If the Dealer Managers commence any of these transactions, they may discontinue them at any time.

No action with respect to the offer of exchange consideration has been or will be taken in any jurisdiction (except the United States and, subject to certain conditions, the United Kingdom, Austria, Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Spain and Switzerland) that would permit a public offering of the offered securities, or the possession, circulation or distribution of this prospectus or any material relating to GM, GM Nova Scotia or the offered securities where action for that purpose is required. Accordingly, the offered securities may not be offered, sold or exchanged, directly or indirectly, and neither this prospectus nor any other offering material or advertisement in connection with the exchange offers may be distributed or published, in or from any such jurisdiction, except in compliance with any applicable rules or regulations of any such country or jurisdiction. A holder outside the United States may participate in the exchange offers but should refer to the disclosure under the “Non-U.S. Offer Restrictions” section.

This prospectus contains summaries that we believe to be accurate with respect to certain documents, but reference is made to the actual documents for complete information. All of those summaries are qualified in their entirety by this reference. Copies of documents referred to herein will be made available to prospective investors upon request to us at the address and telephone number set forth in the “Incorporation of Certain Documents by Reference” section.

This prospectus, including the documents incorporated by reference herein, and the related letter of transmittal contain important information that should be read before any decision is made with respect to an exchange of old notes and the grant of consent to the proposed amendments.

The delivery of this prospectus shall not under any circumstances create any implication that the information contained or incorporated by reference herein is correct as of any time subsequent to the date

 

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hereof or date thereof or that there has been no change in the information set forth or incorporated herein or in any attachments hereto or in the affairs of GM or any of its subsidiaries or affiliates since the date hereof or date thereof.

No one has been authorized to give any information or to make any representations with respect to the matters described in this prospectus and the related letter of transmittal, other than those contained in this prospectus and the related letter of transmittal. If given or made, such information or representation may not be relied upon as having been authorized by us or the Dealer Managers.

 

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IMPORTANT INFORMATION

Old notes tendered and not validly withdrawn prior to the withdrawal deadline may not be withdrawn at any time thereafter, and old notes tendered after the withdrawal deadline may not be withdrawn at any time, unless the applicable offer is terminated without any old notes being accepted or as required by applicable law or our obligations in certain circumstances described herein to extend or reinstate withdrawal rights. If such a termination occurs, the old notes will be returned to the tendering holder promptly.

Old notes tendered for exchange, along with letters of transmittal and any other required documents, should be directed to the Exchange Agent. Any requests for assistance in connection with the exchange offers or for additional copies of this prospectus or related materials should be directed to the Solicitation and Information Agent. Contact information for the Exchange Agent and Solicitation and Information Agent is set forth on the back cover of this prospectus. None of GM, its subsidiaries (including GM Nova Scotia), their respective boards of directors, the Dealer Managers, the Solicitation and Information Agent, the Settlement and Escrow Agent, the Luxembourg Exchange Agent or the Exchange Agent (or such parties’ agents, advisors or counsel) has made, or will make, any recommendation as to whether or not holders should tender their old notes for exchange pursuant to the exchange offers, and grant their consent to the proposed amendments.

The Exchange Agent for the exchange offers is D.F. King & Co., Inc. (the “Exchange Agent”). The Solicitation and Information Agent for the exchange offers is D.F. King & Co., Inc. (the “Solicitation and Information Agent”). The Settlement and Escrow Agent for the non-USD old notes is Deutsche Bank AG, London Branch (the “Settlement and Escrow Agent”). The Luxembourg Exchange Agent for the exchange offers is Deutsche Bank Luxembourg, S.A. (the “Luxembourg Exchange Agent”). The Tabulation Agent for the consent solicitation in respect of the non-USD old notes is D. F. King (Europe) Limited (the “Tabulation Agent”). Morgan Stanley & Co. Incorporated, Banc of America Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities Inc., UBS Securities LLC and Wachovia Capital Markets, LLC (the “Dealer Managers”) are acting as Dealer Managers in connection with the exchange offers.

Subject to the terms and conditions set forth in the exchange offers and the consent solicitations, the exchange consideration to which a tendering holder is entitled pursuant to the exchange offers will be paid on the settlement date, which will be a date promptly following the applicable expiration date of each exchange offer, subject to satisfaction or waiver of all conditions precedent to the exchange offers (the “settlement date”). We do not expect to consummate the exchange offers prior to June 30, 2009. Under no circumstances will any interest be payable because of any delay in the transmission of the exchange consideration to holders by the Exchange Agent or the Settlement and Escrow Agent.

Notwithstanding any other provision of the exchange offers and the consent solicitations, our obligation to pay the exchange consideration for old notes validly tendered for exchange and not validly withdrawn pursuant to the exchange offers and the consent solicitations is subject to, and conditioned upon, the satisfaction or waiver of the conditions described below under “The Exchange Offers and Consent Solicitations—Conditions to the Exchange Offers.”

Subject to applicable securities laws and the terms of the exchange offers and the consent solicitations, we reserve the right to:

 

   

waive any and all conditions to the exchange offers and the consent solicitations to be waived;

 

   

extend, in whole or in part, the exchange offers and the consent solicitations;

 

   

terminate, in whole or in part, the exchange offers and the consent solicitations;

 

   

amend or modify the terms of the exchange offers (including by changing the exchange consideration offered) applicable to one or more series of old notes without amending or modifying the terms of the exchange offers applicable to any other series of old notes; or

 

   

otherwise amend or modify the exchange offers and the consent solicitations in any respect, in whole or in part.

 

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If there is any material change in any of the terms of the exchange offers or the consent solicitations, or in the information published, sent or given to holders of old notes with respect thereto, we will promptly disseminate disclosure of the change in a manner reasonably calculated to inform such holders of such change, including, without limitation, pursuant to the dissemination of additional offer documents, a press release and a posting on our website, and we may extend the exchange offers or withdrawal rights as we determine necessary and otherwise to the extent required by law.

In the event that the exchange offers and the consent solicitations are withdrawn or otherwise not consummated, the exchange consideration will not be paid or become payable to holders of the old notes who have validly tendered their old notes for exchange in connection with the exchange offers, and the old notes tendered for exchange pursuant to the exchange offers will be returned to the tendering holder promptly.

Only registered holders of old notes are entitled to tender old notes for exchange and give consents. Beneficial owners of old notes that are held of record by a broker, bank or other nominee or custodian must instruct such nominee or custodian to tender the old notes for exchange and consent to the proposed amendments on the beneficial owner’s behalf. You may have been provided with a letter of instructions along with this prospectus that may be used by a beneficial owner to instruct a broker, bank or other nominee or custodian to effect the tender of old notes for exchange and consent to the proposed amendments on the beneficial owner’s behalf. See “The Exchange Offers and Consent Solicitations—Procedures for Tendering Old Notes—General.

Tendering holders will not be obligated to pay brokerage fees or commissions to the Exchange Agent, Dealer Managers, the Solicitation and Information Agent, the Settlement and Escrow Agent, the Luxembourg Exchange Agent or us. If a broker, bank or other nominee or custodian tenders old notes on behalf of a tendering holder, such broker, bank or other nominee or custodian may charge a fee for doing so. Tendering holders who own old notes through a broker, bank or other nominee or custodian should consult their broker, bank or other nominee or custodian to determine whether any charges will apply.

 

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QUESTIONS AND ANSWERS ABOUT

THE EXCHANGE OFFERS AND CONSENT SOLICITATIONS

The following are some questions regarding the exchange offers and consent solicitations that you may have as a holder of our old notes and the answers to those questions. We urge you to carefully read additional important information contained in the remainder of this prospectus or incorporated by reference herein and the letter of transmittal. In this prospectus, “we,” “us,” “our,” “the Company” and “GM” refers to General Motors Corporation and not its subsidiaries, unless otherwise stated or the context otherwise requires.

 

Q: Why are we making the exchange offers?

 

A: We are making the exchange offers in connection with the restructuring we are undertaking pursuant to our plan to achieve and sustain our long-term viability, international competitiveness and energy efficiency (as updated from time to time, the “Viability Plan”).

As a condition to obtaining the loans under the First U.S. Treasury Loan Agreement, we agreed to submit, on or before February 17, 2009, our Viability Plan that included specific actions intended to result in the following:

 

   

the repayment of all loans made under the First U.S. Treasury Loan Agreement, together with all interest thereon and reasonable fees and out-of-pocket expenses incurred in connection therewith and all other financings extended to us by the U.S. government;

 

   

compliance with federal fuel efficiency and emissions requirements and commencement of domestic manufacturing of advanced technology vehicles;

 

   

achievement of a positive net present value, using reasonable assumptions and taking into account all existing and projected future costs;

 

   

rationalization of costs, capitalization and capacity with respect to our manufacturing workforce, suppliers and dealerships; and

 

   

a product mix and cost structure that is competitive in the U.S. marketplace.

In addition, the First U.S. Treasury Loan Agreement requires that we use our best efforts to:

 

   

reduce our unsecured public indebtedness,

 

   

modify our retiree healthcare obligations to a new voluntary employee benefit association (the “New VEBA”) arising under the settlement agreement, dated February 21, 2008, between GM, the UAW and counsel to the VEBA-settlement class (the “VEBA-settlement class”) in the class action of Int’l Union, UAW, et al. v. General Motors Corp., Civil Action No. 07-14074 (E.D. Mich. filed Sept. 9, 2007) (the “VEBA settlement agreement”), and

 

   

modify our employee compensation structure, employee severance policies and work rules to make us more competitive with certain of our competitors in the automotive industry.

On March 30, 2009, the President’s Designee (as established under the First U.S. Treasury Loan Agreement) found that our Viability Plan, in its then-current form, was not viable and would need to be revised substantially in order to lead to a viable GM. In response to the determination of the President’s Designee, we have made further modifications to our Viability Plan to satisfy the President’s Designee’s requirement that we undertake a substantially more accelerated and aggressive restructuring plan, including by increasing the amount of public debt reduction that we will seek to achieve beyond that originally required by the First U.S. Treasury Loan Agreement. For additional details about the restructuring we are undertaking pursuant to our Viability Plan, see “The Restructuring.”

The exchange offers are being undertaken in order to achieve our debt reduction objectives set forth in our Viability Plan.

 

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If by June 1, 2009, the President’s Designee has not issued a certification that we and our subsidiaries have taken all steps necessary to achieve and sustain long-term viability, among other things, then the advances under the First U.S. Treasury Loan Agreement and Second U.S. Treasury Loan Agreement would become due and payable on the 30th day thereafter.

Our future is dependent on our ability to successfully execute our Viability Plan or otherwise address the matters described above. If we fail to do so for any reason (including if the exchange offers are not consummated), we would not be able to continue as a going concern and would be forced to seek relief under the U.S. Bankruptcy Code. If we seek relief under the U.S. Bankruptcy Code, holders of old notes may receive consideration that is less than what is being offered in the exchange offers, and it is possible that such holders may receive no consideration at all for their old notes.

 

Q: What are the consequences to holders of old notes if we fail to consummate the exchange offers?

 

A: In the event that we do not receive prior to June 1, 2009 enough tenders of old notes, including the old Series D Notes, to consummate the exchange offers, we currently expect to seek relief under the U.S. Bankruptcy Code. This relief may include (i) seeking bankruptcy court approval for the sale of most or substantially all of our assets pursuant to section 363(b) of the U.S. Bankruptcy Code to a new operating company, and a subsequent liquidation of the remaining assets in the bankruptcy case; (ii) pursuing a plan of reorganization (where votes for the plan are solicited from certain classes of creditors prior to a bankruptcy filing) that we would seek to confirm (or “cram down”) despite the deemed rejection of the plan by the class of holders of old notes; or (iii) seeking another form of bankruptcy relief, all of which involve uncertainties, potential delays and litigation risks. We are considering these alternatives in consultation with the U.S. Treasury, our largest lender.

If we seek bankruptcy relief, holders of old notes may receive consideration that is less than what is being offered in the exchange offers, and it is possible that such holders may receive no consideration at all for their old notes.

For a more complete description of potential bankruptcy relief and risks relating to our failure to consummate the exchange offers, see “Bankruptcy Relief” and “Risk Factors—Risks Related to Failure to Consummate the Exchange Offers.

 

Q: Why are we considering seeking relief under Chapter 11 of the U.S. Bankruptcy Code?

 

A: An out of court restructuring through the exchange offers or an in court restructuring pursuant to the U.S. Bankruptcy Code provide alternative means of restructuring our liabilities and seeking to achieve the survival and long-term viability of our business. Although we do not intend to seek relief under the U.S. Bankruptcy Code if the exchange offers are consummated, in the event we have not received prior to June 1, 2009 sufficient tenders of old notes (including the old Series D notes) to consummate the exchange offers, we currently expect to seek relief under the U.S. Bankruptcy Code.

 

Q: Why are we pursuing an out of court restructuring rather than an in court restructuring?

 

A: We believe there are advantages to restructuring GM out of court. We believe that the successful consummation of the exchange offers would, among other things:

 

   

enable us to continue operating our business without the negative impact that a bankruptcy could have on our relationships with our customers, employees, suppliers, dealers and others;

 

   

reduce the risk of a potentially precipitous decline in our revenues in a bankruptcy; and

 

   

allow us to complete our restructuring in less time and with less risk than any bankruptcy alternatives.

 

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If we have to resort to bankruptcy relief, among other things, you may receive consideration that is less than what is being offered in the exchange offers, and it is possible that you may receive no consideration at all for your old notes.

 

Q: What will I receive if I tender my old notes pursuant to the exchange offers and they are accepted?

 

A: The exchange consideration per 1,000 U.S. dollar equivalent of principal amount (or accreted value as of the settlement date, if applicable) of old notes accepted for exchange will be 225 shares of GM common stock.

Assuming full participation in the exchange offers, holders of old notes tendered in the exchange offers will receive, in the aggregate, approximately 6.1 billion shares of GM common stock, which would represent approximately 10% of the pro forma outstanding GM common stock.

On the settlement date, GM’s restated certificate of incorporation will be amended to effect a 1-for-100 reverse stock split of GM common stock, whereby each 100 shares of GM common stock will be converted into one share of GM common stock.

There is no requirement for an individual holder to tender a minimum principal amount of old notes in the exchange offers. However, where, in connection with the exchange offers or as a result of the reverse stock split, a tendering holder of old notes would otherwise be entitled to receive a fractional share of GM common stock, the number of shares of GM common stock to be received by such holder will be rounded down to the nearest whole number and no cash or other consideration will be delivered to such holder in lieu of such rounded down amount.

In addition, (a) GM will pay, in cash, accrued interest on the old GM notes, other than the discount notes and (b) GM Nova Scotia will pay, in cash, accrued interest on the old GM Nova Scotia notes, in each case, from and including the most recent interest payment date to, but not including, the settlement date. See “The Exchange Offers and Consent Solicitations—Terms of the Exchange Offers.”

 

Q: How do I participate in the exchange offers and consent solicitations?

 

A: To participate in the exchange offers and consent solicitations, you should contact your broker, bank or other nominee or custodian and instruct it to tender your old notes and consent prior to the expiration date.

You may have been provided with a letter of instructions along with this prospectus that may be used by you to instruct a broker, bank or other nominee or custodian to effect the tender of old notes for exchange and consent to the proposed amendments on your behalf.

If you have questions or need assistance in connection with the exchange offers or consent solicitations or require additional letters of transmittal and any other required documents, you may contact D.F. King & Co., Inc., the Exchange Agent and Solicitation and Information Agent, at the address and telephone numbers set forth on the back cover of this prospectus.

Except for holders who tender non-USD old notes prior to the date on which the registration statement of which this prospectus forms a part is declared effective, holders may not tender their old notes pursuant to the exchange offers without delivering consents to the proposed amendments, and holders may not deliver consents to the proposed amendments pursuant to the consent solicitations without tendering their old notes.

Holders of old notes that reside outside of the United States are advised to contact the Solicitation and Information Agent for a copy of the EU Approved Prospectus or the Canadian Offering Memorandum, as applicable, which contains separate representations and certifications that are agreed to upon the tendering of old notes by any such holder outside the United States.

For USD old notes

USD old notes must be tendered through The Depository Trust Company (“DTC”). DTC participants must electronically transmit their acceptance of an offer through DTC’s Automated Tender Offer Program (“ATOP”), for which the exchange offers and consent solicitations will be eligible.

 

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By participating in the exchange offers in this manner, you will be deemed to have acknowledged and agreed that you are bound by the terms of the letter of transmittal, are qualified to accept the exchange offers and consent solicitations and that we may enforce the terms and conditions contained in the letter of transmittal against you.

Holders whose USD old notes are held through Euroclear or Clearstream (together with DTC, the “Clearing Systems”) must transmit their acceptance in accordance with the requirements of Euroclear or Clearstream in sufficient time for such tenders to be timely made prior to the expiration date. Holders should note that such Clearing Systems may require that action be taken a day or more prior to the expiration date in order to cause such old notes to be tendered through DTC.

See “The Exchange Offers and Consent Solicitations—Procedures for Tendering Old Notes—Tender of USD Old Notes through DTC” for more information.

For non-USD old notes

Non-USD old notes must be tendered through either Euroclear or Clearstream. The tender of non-USD old notes through Euroclear or Clearstream will be deemed to have occurred upon receipt by the relevant Clearing System of a valid electronic instruction notice in accordance with the requirements of such Clearing System.

By participating in the exchange offers in this manner, you will be deemed to have acknowledged and agreed that you are bound by the terms of the electronic instruction notice, are qualified to accept the exchange offers and consent solicitations and that we may enforce the terms and conditions contained in the electronic instruction notice against you.

Holders must take the appropriate steps to block non-USD old notes to be tendered in Euroclear or Clearstream so that no transfers may be effected in relation to such non-USD old notes at any time after the date of tender in accordance with the requirements of the relevant Clearing System and the deadlines required by such Clearing System.

See “The Exchange Offers and Consent Solicitations—Procedures for Tendering Old Notes—Tender of non-USD old notes through Euroclear or Clearstream” for more information.

 

Q: What are the conditions to the exchange offers?

 

A: Consummation of the exchange offers is conditioned upon the satisfaction or waiver of the conditions described under “The Exchange Offers and Consent Solicitations—Conditions to the Exchange Offers.” We currently expect that certain conditions may require us to extend the scheduled expiration date in order to be satisfied. For example, the receipt of judicial approval of the proposed VEBA Modifications (as defined below) and the transactions contemplated thereby are currently expected to take up to three months once a binding agreement in respect thereof has been entered into, and therefore require a significant extension of the expiration date beyond the date when withdrawal rights are terminated.

One principal condition, the U.S. Treasury Condition, is the requirement that the results of the exchange offers shall be satisfactory to the U.S. Treasury, including in respect of the overall level of participation by holders of old notes in the exchange offers and in respect of the level of participation by holders of the old Series D notes in the exchange offers.

We currently believe, and our Viability Plan assumes, that at least 90% of the aggregate principal amount (or, in the case of discount notes, accreted value) of the outstanding old notes (including at least 90% of the aggregate principal amount of the outstanding old Series D notes) will need to be tendered in the exchange offers or called for redemption pursuant to the call option (in the case of the non-USD old notes) in order to satisfy the U.S. Treasury Condition. Whether this level of participation in the exchange offers will be required (or sufficient) to satisfy the U.S. Treasury Condition will ultimately be determined by the U.S. Treasury. The actual overall level of participation in the exchange offers may be different than what we have assumed, and this difference may be material.

 

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Q: Will the exchange consideration I receive upon tender of the old notes be freely tradable in the United States?

 

A: Yes. Generally, the exchange consideration you will receive pursuant to the exchange offers will be freely tradable in the United States, unless you are an affiliate of GM, as that term is defined in the Securities Act of 1933, as amended (the “Securities Act”). GM’s common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “GM.”

 

Q: If the exchange offers are consummated and I do not participate, how will my rights and obligations under the old notes be affected?

 

A: Old notes not tendered pursuant to the exchange offers will remain outstanding after the consummation of the exchange offers. However, we intend to redeem any non-USD old notes that are not tendered in the exchange offers pursuant to the call option immediately upon the effectiveness of the proposed amendments to the debt instruments governing the non-USD old notes, if adopted. For more information, see “—What are the consequences to holders of old notes if we fail to consummate the exchanged offers?” above.

If the exchange offers are consummated, then the debt instruments governing non-tendered old notes will be amended and holders of old notes will be bound by the terms of those debt instruments even if they did not consent to the proposed amendments. The proposed amendments would eliminate certain provisions under the debt instruments governing non-tendered old notes, including:

 

   

the limitation on our ability to incur liens and enter into sale-leaseback transactions;

 

   

the limitation on merger, consolidation, sales or conveyance of assets; and

 

   

certain events of default relating to the failure to perform non-payment related covenants and certain events of bankruptcy, insolvency or reorganization.

In addition and as discussed above, the proposed amendments to the debt instruments governing the non-USD old notes would add a call option with respect to each series of non-USD old notes. The call option will provide that outstanding non-USD old notes of each series may be redeemed at any time at the option of GM or GM Nova Scotia, as the case may be, in return for the exchange consideration offered pursuant to the exchange offers (i.e., 225 shares of GM common stock per 1,000 U.S. dollar equivalent of principal amount of non-USD old notes). In addition, (a) GM will pay, in cash, accrued interest on the Euro old notes called for redemption pursuant to the call option and (b) GM Nova Scotia will pay, in cash, accrued interest on the old GM Nova Scotia notes called for redemption pursuant to the call option, in each case, from and including the most recent interest payment date to, but not including, the redemption date, which is expected to be the settlement date. We intend to exercise the call option in respect of all non-USD old notes not tendered in the exchange offers immediately upon the effectiveness of the proposed amendments to the debt instruments governing the non-USD old notes, if adopted. From and after the time that we exercise the call option on any series of non-USD old notes, (1) such notes will be deemed to be discharged, (2) such notes will not be transferable and (3) holders of such notes will have no further rights in respect of those notes other than receipt of the exchange consideration and payment in cash of accrued but unpaid interest on such notes.

For a more detailed description of the proposed amendments to the debt instruments governing the old notes, see “Proposed Amendments.”

 

Q: What risks should I consider in deciding whether or not to tender my old notes pursuant to the exchange offers and consent to the proposed amendments?

 

A: In deciding whether to participate in the exchange offers and consent to the proposed amendments, you should carefully consider the discussion of risks and uncertainties described under “Risk Factors” herein and described under the caption “Risk Factors” located in certain of the documents incorporated by reference into this prospectus.

 

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Q: Is GM or any of its subsidiaries making a recommendation regarding whether I should tender my old notes pursuant to the exchange offers and consent to the proposed amendments?

 

A: None of GM, its subsidiaries (including GM Nova Scotia), their respective boards of directors, the Dealer Managers, the Solicitation and Information Agent, the Settlement and Escrow Agent, the Luxembourg Exchange Agent or the Exchange Agent (or any such party’s respective agents, advisors or counsel) has made, or will make, a recommendation to any holder as to whether such holder should exchange its old notes pursuant to the exchange offers or grant its consent to the proposed amendments. You must make your own investment decision whether to exchange any old notes pursuant to the exchange offers and make your own decision whether to grant your consent to the proposed amendments in the consent solicitations. We urge you to read carefully this prospectus (including the information incorporated by reference) and the related letter of transmittal in its entirety, including the information set forth in the section entitled “Risk Factors.”

 

Q: What are the material United States federal income tax consequences of the exchange offers to holders of old notes?

 

A: We intend to take the position, although not free from doubt, that the exchange of old notes (other than old Series D notes) pursuant to the exchange offers will constitute a tax-free recapitalization in which gain or loss is generally not recognized. Any consideration allocable to accrued but unpaid interest generally will be taxable to a holder of old notes to the extent not previously included in such holders’ gross income. Because the original term of the old Series D notes was less than five years, it is unclear whether the old Series D notes should be treated as “securities” for U.S. federal income tax purposes. It is therefore unclear whether the exchange of old Series D notes pursuant to the exchange offers will constitute a fully taxable transaction or a tax-free recapitalization. For a discussion of certain U.S. federal income tax consequences relating to the exchange offers, see “Material United States Federal Income Tax Considerations.”

 

Q: If I am a holder outside the United States, can I participate in the exchange offers?

 

A: A holder outside the United States may participate in the exchange offers but should refer to the disclosure under the “Non-U.S. Offer Restrictions” section. This prospectus does not constitute an offer to participate in the exchange offers and the consent solicitations to any person in any jurisdiction where it is unlawful to make such an offer or solicitation. Offers to holders in the United Kingdom, Austria, Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Spain and Switzerland will be made only pursuant to the EU Approved Prospectus, which will incorporate this prospectus therein and will indicate on the front cover thereof if it can be used for such offers. Offers to non-U.S. qualified offerees outside of these jurisdictions (and the United States and Canada) will be made only pursuant to the EU Approved Prospectus, which will incorporate this prospectus and will indicate on the front cover thereof if it can be used for such offers. Offers to non-U.S. qualified offerees in Canada will be made only pursuant to the Canadian Offering Memorandum, which will incorporate this prospectus.

 

Q: What are the old Series D Notes forbearance, waiver and extension provisions?

 

A:

By tendering, and not validly withdrawing, their old Series D notes, holders of old Series D notes will irrevocably agree, in the event the exchange offers are extended beyond June 1, 2009, to extend the maturity of their old Series D notes and to forbear from taking any action to enforce, or direct enforcement of, and waive any and all of the rights and remedies available to such holders under such old Series D notes or the indenture governing such old Series D notes (the “Forbearance, Waiver and Extension”), in each case until the Forbearance, Waiver and Extension Termination Date, which is the date of the earlier of (a) the termination of the exchange offers (including in the event GM files a petition for relief under the U.S. Bankruptcy Code) and (b) the consummation of the exchange offers. At the Forbearance, Waiver and Extension Termination Date, the Forbearance, Waiver and Extension will expire and any and all principal

 

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and interest amounts otherwise due under any old Series D notes that remain outstanding (i.e., any old Series D notes not accepted for exchange in the exchange offers) will become immediately due and payable. The Forbearance, Waiver and Extension will attach to any old Series D notes that have been tendered in the exchange offers and not validly withdrawn on or before May 26, 2009, which is the date set initially as the withdrawal deadline, or such later date as the registration statement of which this prospectus forms a part is declared effective or as GM in its absolute discretion may determine (the “Attachment Date”). The Attachment Date will also be the expiration and settlement dates for the exchange offer that we are making in which we are offering to exchange amended Series D notes (old Series D notes to which the Forbearance, Waiver and Extension have attached and which will not mature until the Forbearance, Waiver and Extension Termination Date) for old Series D notes. By having tendered, and not validly withdrawn, their old Series D notes as of the Attachment Date, such holders shall consent to the attachment of the Forbearance, Waiver and Extension to their old Series D notes, and GM may in its absolute discretion enter into a supplemental indenture as of the Attachment Date or take such other action as it determines is appropriate (including by assigning a temporary or different CUSIP number to such old Series D notes) to evidence the attachment of the Forbearance, Waiver and Extension; such holders shall also be deemed to have tendered any amended Series D notes issued, or deemed issued, by GM in order to implement the Forbearance, Waiver and Extension. If a holder of old Series D notes validly withdraws tendered old Series D notes prior to the Attachment Date, then such old Series D notes will not be subject to the Forbearance, Waiver and Extension. However, if a holder of old Series D notes validly withdraws its old Series D notes at any time following the Attachment Date (in the event withdrawal rights have been extended past or reinstated after the Attachment Date), then such old Series D notes, notwithstanding such withdrawal or any subsequent transfer, will continue to be subject to the Forbearance, Waiver and Extension until the Forbearance, Waiver and Extension Termination Date.

Our solicitation of the agreement of the holders of old Series D notes to the terms of the Forbearance, Waiver and Extension is an exchange offer in which we are offering to exchange amended Series D notes for old Series D notes. This exchange offer is subject to applicable SEC rules and regulations, including Rule 13e-4 under the Exchange Act. This exchange offer will expire, withdrawal rights with respect to this offer shall terminate, and the settlement date for this offer will occur on, the Attachment Date.

 

Q: Can I revoke the tender of my old notes and my consents approving the proposed amendments at any time?

 

A: You can revoke the tender of your old notes (and therefore your consent to the proposed amendments) prior to the withdrawal deadline, which is 11:59 p.m., New York City time, on May 26, 2009, unless extended, by delivering a written withdrawal instruction to the applicable Clearing System, in accordance with the relevant procedures described in “The Exchange Offers and Consent SolicitationsWithdrawal of Tenders.” Except in certain circumstances described in “The Exchange Offers and Consent Solicitations—Withdrawal of Tenders,” old notes that are validly tendered prior to the withdrawal deadline and that are not validly withdrawn prior to the withdrawal deadline may not be withdrawn on or after the withdrawal deadline, and old notes that are validly tendered on or after the withdrawal deadline may not be withdrawn.

If a holder of old Series D notes elects to withdraw tendered old Series D notes at any time following the Attachment Date (as described above), then such old Series D notes, notwithstanding such withdrawal or any subsequent transfer, will continue to be subject to the Forbearance, Waiver and Extension until the Forbearance, Waiver and Extension Termination Date.

 

Q: What charter amendments are being made?

 

A: The amount of GM common stock to be issued pursuant to the exchange offers, the U.S. Treasury Debt Conversion (as defined below) and the proposed VEBA Modifications exceeds the number of shares of GM common stock currently authorized under GM’s certificate of incorporation. Consequently, prior to the distribution of GM common stock to tendering holders on the settlement date, we plan on implementing charter amendments that provide for, among other things, an increase in the number of authorized shares of GM common stock.

 

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To effect the charter amendments, the following will occur prior to the distribution of GM common stock to tendering holders on the settlement date:

 

   

in partial satisfaction of the U.S. Treasury Debt Conversion, we will issue to the U.S. Treasury (or its designee) authorized shares of GM common stock in an amount that will represent a majority of the outstanding shares of GM common stock as of such date,

 

   

the U.S. Treasury (or its designee) will execute and deliver to us a stockholder written consent authorizing the charter amendments, and

 

   

we will file the charter amendments with the Delaware Secretary of State allowing us to (a) reduce the par value of GM common stock to $0.01 per share (the “par value reduction”), (b) increase the number of authorized shares of GM common stock to 62 billion shares (the “common stock increase”), and (c) effect a 1-for-100 reverse stock split of GM common stock, whereby each 100 shares of GM common stock will be converted into one share of GM common stock. See “Description of the Charter Amendments.”

 

Q: Will fractional shares be issued in the exchange offers or the reverse stock split?

 

A: Unless otherwise indicated, all share numbers contained in this prospectus related to the exchange offers are presented without giving effect to the reverse stock split. We do not currently intend to issue fractional shares in connection with the exchange offers or the reverse stock split. Where, in connection with the exchange offers or as a result of the reverse stock split, a tendering holder of old notes would otherwise be entitled to receive a fractional share of GM common stock, the number of shares of GM common stock to be received by such holder will be rounded down to the nearest whole number and no cash or other consideration will be delivered to such holder in lieu of such rounded down amount. For example, 1,000 U.S. dollar equivalent amount of old notes would be exchanged for 225 shares of GM common stock, which would be converted to 2 shares of GM common stock after the reverse stock split and the rounding down of fractional shares occur. 3,000 U.S. dollar equivalent amount of old notes would be exchanged for 675 shares of GM common stock, which would be converted to 6 shares of GM common stock after the reverse stock split and the rounding down of fractional shares occur.

Stockholders who own GM common stock prior to the settlement date and would otherwise hold fractional shares because the number of shares of GM common stock they held before the reverse stock split would not be evenly divisible based upon the 1-for-100 reverse stock split ratio will be entitled to a cash payment (without interest or deduction) in respect of such fractional shares. To avoid the existence of fractional shares of GM common stock, shares that would otherwise result in fractional shares from the application of the reverse stock split will be collected and pooled by our transfer agent and sold in the open market and the proceeds will be allocated to the affected existing stockholders’ respective accounts pro rata in lieu of fractional shares. The ownership of a fractional interest will not give the holder thereof any voting, dividend or other rights, except to receive the above-described cash payment. GM will be responsible for any brokerage fees or commissions related to the transfer agent’s selling in the open market shares that would otherwise be entitled to fractional shares. See “Description of the Charter Amendments” for greater detail about the reverse stock split.

 

Q: Whom do I call if I have any questions on how to tender my old notes or any other questions relating to the exchange offers and consent solicitations?

 

A: Questions and requests for assistance, and all correspondence in connection with the exchange offers and consent solicitations, or requests for additional letters of transmittal and any other required documents, may be directed to D.F. King & Co., Inc., the Exchange Agent and Solicitation and Information Agent, at the address and telephone numbers set forth on the back cover of this prospectus.

 

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SUMMARY

This summary highlights information contained elsewhere in, or incorporated by reference into, this prospectus. Because this is only a summary, it does not contain all of the information that may be important to you. For a more complete understanding of our company, the exchange offers and the consent solicitations, we encourage you to read this entire prospectus, including the section entitled “Risk Factors,” the documents referred to under the heading “Where You Can Find More Information” and the documents incorporated by reference under the heading “Incorporation of Certain Documents by Reference.”

General Motors Corporation

We are engaged primarily in the worldwide development, production and marketing of cars, trucks and parts. We develop, manufacture and market vehicles worldwide through our four automotive segments: GM North America, GM Europe, GM Latin America/Africa/Mid-East and GM Asia Pacific.

Our total worldwide car and truck deliveries were 8.4 million, 9.4 million and 9.1 million, in 2008, 2007 and 2006, respectively. Substantially all of our cars, trucks and parts are marketed through retail dealers in North America, and through distributors and dealers outside of North America, the substantial majority of which are independently owned. GM North America primarily meets the demands of customers in North America with vehicles developed, manufactured and/or marketed under the following brands:

 

• Chevrolet    • Buick    • Saab    • GMC
• Pontiac    • Cadillac    • HUMMER    • Saturn

The demands of customers outside North America are primarily met with vehicles developed, manufactured and/or marketed under the following brands:

 

• Opel    • Saab    • GMC    • HUMMER
• Vauxhall    • Buick    • Cadillac    • Isuzu
• Holden    • Chevrolet    • Daewoo    • Suzuki

At December 31, 2008, we also had equity ownership stakes, directly or indirectly through various regional subsidiaries, in joint venture companies, including GM Daewoo, New United Motor Manufacturing, Inc. (NUMMI), Shanghai GM, Ltd., SAIC-GM-Wuling Automobile Co. Ltd. and CAMI Automotive Inc. These companies design, manufacture and market vehicles under the following brands:

 

• Pontiac    • Wuling    • Chevrolet    • Buick
• Daewoo    • Cadillac    • Holden   

Our Saab, HUMMER and Saturn brands have been the subject of a strategic review. As a result of our strategic review of the global Saab brand business, Saab Automobile AB (“Saab”) announced, in February of 2009, that it has filed for reorganization under a self-managed Swedish court process. Pending court approval, the reorganization will be executed over a three-month period and will require independent funding to succeed. During the reorganization process, Saab will continue to operate as usual in accordance with the formal reorganization process. A final resolution with respect to HUMMER, Saab and Saturn is expected to be made in 2009. In addition, Pontiac—which is part of the Buick, Pontiac-GMC retail channel—is expected to be phased out by 2010. Further, in connection with our plan to achieve and sustain long-term viability, international competitiveness and energy efficiency, we may review other brands to determine their fit within our portfolio. See “The Restructuring—Viability Plan” for a further discussion of our strategic approach.

In addition to the products we sell to our dealers for consumer retail sales, we also sell cars and trucks to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies and governments. Sales to fleet customers are completed through our network of dealers and in some cases directly by us. Our retail and fleet customers can obtain a wide range of after sale vehicle services and products through our dealer network, such as maintenance, light repairs, collision repairs, vehicle accessories and extended service warranties.

 

 

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Recent Developments

Business Updates

GM dealers in the United States sold 412,903 vehicles during the first quarter of 2009, which represents a decline of approximately 49% compared to the same period in 2008. The baseline sales assumption in our Viability Plan for the United States in 2009 is 2,048,000 vehicles, which is based on a baseline industry vehicle sales forecast for 2009 of 10.5 million total vehicles sold in the United States. Our market share forecast for 2009 is 19.5% in the United States.

In view of the decline in vehicle sales by our dealers in the United States and globally and continuing weak economic conditions generally, we anticipate that we generated substantial negative cash flow from operations during the first quarter of 2009 and that we will report significantly less revenue and significantly greater losses than those we experienced during the first quarter of 2008.

U.S. Treasury Loan Agreements and Section 136 Loans

On December 31, 2008, we and certain of our domestic subsidiaries entered into the First U.S. Treasury Loan Agreement with the U.S. Treasury, pursuant to which the U.S. Treasury agreed to provide us with a $13.4 billion secured term loan facility. We borrowed $4.0 billion under this facility on December 31, 2008, $5.4 billion on January 21, 2009 and $4.0 billion on February 17, 2009. On January 16, 2009, we entered into the Second U.S. Treasury Loan Agreement, pursuant to which we borrowed $884.0 million from the U.S. Treasury and applied the proceeds of the loan to purchase additional membership interests in GMAC, increasing our common equity interest in GMAC from 49% to 59.9%.

The loans under the First U.S. Treasury Loan Agreement are scheduled to mature on December 30, 2011, and the loan under the Second U.S. Treasury Loan Agreement is scheduled to mature on January 16, 2012, in each case unless the maturity date is accelerated as provided in the applicable loan agreements. The maturity date may be accelerated if, among other things, the President’s Designee has not certified our Viability Plan by the Certification Deadline (as defined below), which was initially March 31, 2009 and has been postponed to June 1, 2009, as discussed below.

On March 30, 2009, the President’s Designee found that our Viability Plan, in its then-current form, was not viable and would need to be revised substantially in order to lead to a viable GM. The President’s Designee also concluded that the steps required to be taken by March 31, 2009 under the First U.S. Treasury Loan Agreement, including receiving approval of the required labor modifications (the “Labor Modifications”) by members of our unions, obtaining receipt of all necessary approvals of the required VEBA modifications (other than regulatory and judicial approvals) and commencing the exchange offers to implement the required debt reduction, had not been completed, and as a result, we had not satisfied the terms of the First U.S. Treasury Loan Agreement.

In conjunction with the March 30, 2009 announcement, the administration announced that it would offer us adequate working capital financing for a period of 60 days while it worked with us to develop and implement a more accelerated and aggressive restructuring that would provide us with a sound long-term foundation. On March 31, 2009, we and the U.S. Treasury entered into amendments to the First U.S. Treasury Loan Agreement and the Second U.S. Treasury Loan Agreement to postpone the Certification Deadline to June 1, 2009 and, with respect to the First U.S. Treasury Loan Agreement, to also postpone the deadline by which we are required to provide the Company Report (as defined below) to June 1, 2009. We and the U.S. Treasury entered into an amendment to the First U.S. Treasury Loan Agreement, pursuant to which, among other things, the U.S. Treasury agreed to provide us with $2.0 billion in additional working capital loans under the First U.S. Treasury Loan Agreement and we borrowed $2.0 billion on April 24, 2009. In connection with the amendment to provide the $2.0 billion of additional loans, we issued to the U.S. Treasury a promissory note in an aggregate principal amount of $133.4 million as part of the compensation for the additional loans. We refer to the debt incurred

 

 

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under the First U.S. Treasury Loan Agreement, the Second U.S. Treasury Loan Agreement and any other debt issued or owed to the U.S. Treasury in connection with those loan agreements (including any additional debt that may be incurred after the date hereof in connection with the foregoing but excluding any debt incurred in connection with the Receivables Program and U.S. Government Warranty Program, each as defined below), as the “U.S. Treasury Debt.”

On April 6, 2009, the U.S. Department of Energy (the “Department of Energy”) determined that we did not meet the financial viability requirements to qualify for federal funding (“Section 136 Loans”) of our advanced technology vehicle programs under Section 136 of EISA. The Department of Energy’s determination was based on the U.S. Treasury’s response to our Viability Plan we submitted to the U.S. Treasury on February 17, 2009. We expect that the Department of Energy will determine that we meet the viability requirements under EISA if the U.S. Treasury approves our current Viability Plan.

Changes in Management

On March 29, 2009, G. Richard Wagoner, Jr. announced his resignation as Chairman and Chief Executive Officer of GM. Following Mr. Wagoner’s resignation, Kent Kresa was named interim Chairman and Frederick A. Henderson was named Chief Executive Officer. At the same time, we announced our intention to reconstitute our board of directors such that new directors will make up the majority of the board.

Automotive Supplier Financing

On March 19, 2009, the U.S. Treasury announced that it will provide up to $5 billion in financial assistance to automotive suppliers by guaranteeing or purchasing certain of the receivables payable by us. On April 3, 2009, GM Supplier Receivables LLC (“GM Receivables”) and the U.S. Treasury entered into various agreements to establish our participation in the program (the “Receivables Program”). The Receivables Program is expected to operate for up to one year and may, at the U.S. Treasury’s direction, be extended for a longer term. We have begun the process of qualifying certain suppliers of goods and services to participate in the Receivables Program.

In order to fund these purchases of receivables and operate the Receivables Program, it is expected that we will make equity contributions to GM Receivables of up to $175 million, and the U.S. Treasury will loan up to $3.5 billion to GM Receivables.

U.S. Government Warranty Program

On March 30, 2009, the U.S. Government announced that it will create a warranty program pursuant to which a separate account will be created and funded with cash contributed by us and a loan from the U.S. Treasury to pay for repairs covered by our warranty on each new vehicle sold by us during our restructuring period. It is expected that the cash contributions from us and the loan from the U.S. Treasury will total 125% of the costs projected by us that are required to satisfy anticipated claims under the warranty issued on those vehicles. We have agreed to participate in the program and to contribute a portion of the cash required to cover the projected costs of anticipated warranty claims for each vehicle covered by the program.

Foreign Restructuring Activities