Look At That Ex-Car Go

As expected, GM is announcing the death of Pontiac and 23,000 jobs with it, plus hundreds of dealers.

General Motors announced plans to cut 23,000 U.S. jobs by 2011, drop its storied Pontiac brand and slash 40% of its dealer network in its latest bid to stay out of bankruptcy.

GM also announced an offer to its bondholders to swap $27 billion of the company's unsecured debt for stock. GM is offering bondholders 225 shares of its stock for every $1,000 it owes the bondholders in principal. The move will greatly dilute the value of GM shares held by current stockholders.

Still, shares of GM (GM, Fortune 500), a component of the Dow Jones industrial average, gained nearly 10% in pre-market trading following the announcement due to hopes that the company will now be able to avoid bankruptcy.

Still, 40% of GM dealers will be some serious job losses. We'll see how this shakes out. It's a big step towards solvency.

If only Obama was as tough on the banks.

[UPDATE] Almost overlooked this part.

GM said that it will ask the government to take more than 50 percent of its common stock in exchange for canceling half the government loans to the company as of June 1. The swap would cancel about $10 billion in government debt.

In addition, GM is offering stock to the United Auto Workers for at least 50 percent of the $20 billion the company must pay into a union run trust that will take over retiree health care expenses starting next year.

If both are successful, the government and UAW health care trust would own 89 percent of GM stock, with the government holding more than a 50 percent stake, CEO Fritz Henderson said in a news conference at GM's Detroit headquarters.

Oh sure, we'll Plan N the freakin car companies, but not the banks.