theSun | MONDAY JULY 6 2009
business
GM considers options
ahead of court ruling
DETROIT: As General Motors executives
await a key court ruling that will determine
whether they can establish a new company,
the shape of any future enterprise is already
being considered.
At issue are questions such as when sales
of the new company’s shares will begin and
how much public financial disclosure the
new GM will offer. The revamped company
will be largely owned by the US govern-
ment, which will have a 60% stake.
The Canadian government will control
11%, the United Auto Workers (UAW)
union’s healthcare trust a further 17.5%
and the remainder will belong to various
secured creditors that have agreed to accept
equity for debt.
If GM receives a favourable ruling this
week, chief financial officer Ray Young
wants an initial public offering to get under
way as soon as practicable.
“There is a lot of interest from the future
stakeholders of new GM to start the process
of selling down the shares,” Young said last
month.
“At the earliest, we would be talking
Discomfort over dollar thrust
onstage for Italy summit
PARIS: World leaders are bound to express the
hope that the worst of the global economic
crisis is passing when they meet this week, but
they are now under pressure, too, to manage a
Chinese challenge to dollar supremacy.
Beijing, which has floated the idea of an
alternative to the dollar as world reserve
currency, wants the matter – sensitive in
financial markets wary of risks to US asset
values – broached at a July 8-10 summit in Italy,
officials say.
Leaders from the Western economic pow-
ers and Russia meet in Italy on Wednesday
and are joined the day after by leaders from
China, India, Brazil and others to discuss global
challenges – chief among them the worst
recession in living memory.
German Chancellor Angela Merkel says not
to expect any grand initiatives in Italy, largely
AirAsia eyes more destinations in Asia Pacific, Mideast
KUALA LUMPUR: AirAsia Bhd, the low cost
carrier which services an extensive network
with 122 routes covering more than 65
destinations, is seeking to serve more major
and small cities in Asia-Pacific and the Middle
East.
Through its corporate philosophy of ‘Now
Everyone Can Fly’, the leading low cost airline
in Asia says it is committed to serve three
billion people who are “currently underserved
with poor connectivity and high fares”.
“We will go anywhere over four-hour desti-
nations for our AirAsia X and below four-hour
destinations for AirAsia,” said AirAsia chair-
man Datuk Aziz Bakar in an interview with
Bernama.
AirAsia X is the low cost long-haul affili-
ate carrier of AirAsia that currently flies
to destinations in China, Australia and
the UK.
The carrier is planning to add
two to three new routes before
end of this year in China such
as Xi’an and Chongqing,
about the first or second quarter of 2010 and
after that it could take years to unwind the
government and union positions.”
UAW president Ron Gettelfinger, who
is concerned about the union’s health care
trust, has said he wants the shares sold as
soon as possible, but Canada has said it
could take eight years to sell its stake.
Questions also remain about the level of
public financial disclosure GM will offer in
its next incarnation.
After emerging from bankruptcy, GM
could operate as a privately-held company,
which would require it to submit regular
financial reports to principal shareholders
that might not be made public.
Young has said that GM, which burned
through US$40 billion (RM140 billion) in
cash and lost US$100 billion (RM350 bil-
lion) in market value since 2005, intends
to make significant changes to its balance
sheet by writing off assets and revaluing
others.
But GM spokeswoman Renee J. Rashid-
Merem said the company had no intention
of trying to hide its financial condition.
because governments are already pumping
trillions of dollars into bank stabilisation and
economic stimulus, and also because they
have their eyes on a bigger G20 summit in the
US city of Pittsburgh in September.
The best the Italians can expect from the
meetings in the quake-hit town of L’Aquila,
economists say, is a batch of statements that
commit the old and new economic powers to
keep working together to contain the crisis
and, once that is done, envisage new rules for
a better regulated global economy.
Carl Weinberg of High Frequency Econom-
ics in New York says genuine coordination
beyond carefully negotiated communiques is
hard to have when governments are spending
so much money to tend to their own voters and
industries right now.
“In a time when fiscal budgets are stretched
and four new routes in India comprising
Bangalore, Trivandram, Chennai and Cochin,
Aziz said.
He said the airline has applied to fly into
South Korea, and is also eyeing other desti-
nations in the Middle East and Australia like
Sydney.
“The time is right for us to fully take advan-
tage of the current economic downturn and be
prepared when the economy turns around.
“I think many full service airline passengers
are turning to non-frill service because they
tend to spend less and save more,” he said.
Aziz said AirAsia was also promoting its
services aggressively to stimulate demand.
“The demand is there and people will fly if
they get cheap fares. Passengers only pay the
ticket but when they pay for food, we have to
make sure it is value for money,” he said.
Aziz said AirAsia’s average load factor was
about 73 to 75% in the last three months,
while AirAsia X had been getting very strong
load factor.
The London flight’s average load factor was
15
“We will provide an adequate level of
detail. There is no intention of not being
open,” she said.
GM is a complex enterprise with 400
separate subsidiaries worldwide and it is
not likely to provide information in future
financial report on either its European
operations or its pension obligations.
“The new GM’s major shareholder is
the US government, or essentially you and
I, and I think the taxpayers and Congress
should demand public filings of financial
information just like GM did when they
were a public company,” said Brad Coulter,
a consultant with O’Keefe & Associates in
Bloomfield, Michigan.
But some experts believe it might be
in GM’s interest to limit public financial
disclosure.
“Maybe it’s good GM isn’t going to dis-
close financial information, because with
GM, the bad news never stops,” said Van
Conway, a bankruptcy expert based in
Detroit, the home of the US auto industry.
“They’ve got to figure out a way to get
beyond it.” – AFP
and deficits are reaching historic proportions,
few governments will be able to find the cash
to support foreigners’ standards of living.
Resources are need to buy jobs at home,” he
said.
Summit host Silvio Berlusconi, Italy’s prime
minister, may find it easy enough to broker
what the leaders can say about the state of the
economy right now, namely that the situation
may be stabilising but the world is far from out
of the woods.
The Organisation for Economic Cooperation
and Development raised its economic forecasts
on June 24 for the first time in two years, pre-
dicting 4.1% GDP contraction in the 30 mostly
industrialised countries of the OECD as a whole
rather than the 4.3% previously envisaged. It
forecast a minor 0.7% rise in GDP next year
instead of further dip. – Reuters
between 80 and 83%.
Asked on the impact of Influenza A(H1N1)
virus, he said the airline’s forward booking
was not affected very much in the last two
months but it was continuing with its aggres-
sive marketing.
“There is H1N1, but if we are to offer 5,000
free tickets to fly to any destination within
Asia, I’m sure it would be fully taken up within
three to four hours,” he said.
Commenting on the new low-cost carrier
terminal (LCCT), Aziz said AirAsia hoped the
airport would be completed on time to accom-
modate its expansion plan.
“We can’t just take the delivery of the new
aircrafts with no place to park,” he said.
AirAsia also hopes the commercial terms
are agreed and accepted as soon as possible,
he said.
It is understood that the new LCCT will be
built by Malaysia Airports Holdings Bhd and
work is expected to start this month, and
scheduled for completion by the third quarter
of 2011. – Bernama
Chinese carmaker bids for GM’s
Opel: Reports
BEIJING: Chinese carmaker Beijing Automotive Industry
Corp (BAIC) is in the running for General Motors’ European
unit with a bid worth €660 million (RM3.234 billion), accord-
ing to reports. BAIC and GM China were both unavailable
for comment when contacted by AFP yesterday.
BAIC submitted a non-binding offer for GM’s
German-based unit Opel late Thursday, just before a
deadline for prospective buyers, according to China’s
Guangzhou Daily newspaper, the Financial Times and
Dow Jones Newswires.
BAIC’s offer was said to be worth €660 million .
Russian state lender Sberbank is also in the bid-
ding for Opel in partnership with Canadian auto parts
manufacturer Magna International.
The German government in May announced a rescue
plan for Opel in which 35% of the firm would go to Sberbank
and 20% to Magna, but talks have bogged down since.
According to the FT, RHJ International, a Brussels-
based industrial holding linked to US buy-out group
Ripplewood, has also made a non-binding offer.
Fiat is also interested in Opel, but has pledged no
cash for the stake.
The head of GM Europe has said he hopes Opel will
be bought by Magna by mid-July, and that the Cana-
dian firm has a “considerable lead” on other possible
buyers, a report said Saturday.
“The only thing remaining is for the details to be
agreed” between the two businesses, Carl-Peter
Forster told Sunday newspaper Frankfurter Allegem-
eine Zeitung. – AFP
Nomura breaks into Saudi
investment banking market
RIYADH: Japanese giant Nomura said yesterday it
had launched investment banking operations in
Saudi Arabia, becoming the first Asian securities firm
to break into the lucrative, rapidly growing market.
The move came after the company was author-
ised by Saudi Arabia’s Capital Market Authority to
offer corporate finance, capital market and wealth
management services for local clients and also to
sell overseas securities locally as an agent.
“A strong local presence is a critical part of
Nomura’s regional strategy,” Nomura’s chief ex-
ecutive for Middle East and Africa Philip Lynch
said in a statement.
“As the first Asian securities firm in Saudi Ara-
bia, Nomura is especially well placed to bridge
and facilitate the growing commercial interests
between the Gulf and the Far East and strengthen
emerging trading relationships,” he said. – AFP