This is a rush transcript from "Your World With Neil Cavuto," June 1, 2009. This copy may not be in its final form and may be updated.
(BEGIN VIDEO CLIP)
PRESIDENT BARACK OBAMA: In short, our goal is to get GM back on its feet, take a hands-off approach, and get out quickly.
(END VIDEO CLIP)
NEIL CAVUTO, HOST: Well, good luck, Mr. President, because, to hear the CEO of GM himself tell it, taxpayers are knee-deep in this for a while, maybe — maybe — a long while.
Welcome, everybody. I am Neil Cavuto.
Gee. No, GM, the carmaker goes under. Investors just go on a buying rampage.
• Video: Watch Cavuto's interview
And a somewhat bemused GM CEO, Fritz Henderson, goes on to ponder life at bankruptcy now with me:
CAVUTO: Do you think the — the market's just relieved that this has happened, that, you know, this has been kind of like "Waiting for Godot," and now here it is?
FRITZ HENDERSON, CEO, GENERAL MOTORS (GM): Well, I'm not sure the degree to which our action is — is — can really be traced as a causal factor for the market. I think there's a lot of other reasons that are driving the market. But I think, in terms of providing definition around General Motors, today is, in many ways, a watershed day.
CAVUTO: Or it could be the market saying, you're not a factor anymore. You're going to be taken out of the Dow 30, first time in a century.
How do you feel about that?
HENDERSON: Neil, this has been a — a deeply painful process for the men and women of General Motors, myself included.
Being — you know, being taken out of the Dow is a factor, given the fact that our — the value of our shares are going to be wiped out. That's what we would have expected to happen, but, nonetheless, it's just a reminder of the — that sacrifices that are being made and the importance of us actually transforming the company in the future.
CAVUTO: Let me ask you, Mr. Henderson, the president, earlier on today, in his remarks on this historical development said, "Our goal is to help GM get back on its feet and get out quickly."
You went on to say in your press conference a few moments ago, it will be years, not months, before the government can unwind its position in GM.
HENDERSON: So, I would say, certainly, I think what the president was talking about is two things: one, getting out of a bankruptcy process quickly by virtue of executing the 363. That's a question in our case of 60 to 90 days. And I think we're perfectly in line.
And, with respect to the process by which the Treasury or the other investors dispose of the shares over time, I mean, just given the size, given the nature of the capital markets, you would expect that to be a multiyear process. But, nonetheless, that's a question more appropriately posed, actually, to — to the Treasury.
CAVUTO: But it is possible that the government could be here for years, right?
HENDERSON: Oh, it is possible. But, again, I — that's not my — my call.
HENDERSON: Our — our job as a — as a leadership team is to actually deliver the numbers, and then they decide how they can best maximize the return to the U.S. taxpayer.
Sir, we have already gotten indications, and I guess you have accepted an invite from Senator John Rockefeller of West Virginia to testify on Capitol Hill, I think, the day after tomorrow on closing dealerships and how you intend to go through that.
Do you need government OK on what dealerships you close?
HENDERSON: No, we do not. That is a management decision completely.
So, as was also brought up in the press conference, if you are closing a lot of dealerships in a — in a heavy union area or a heavy union state, you are free to do that, without even checking it with the government?
CAVUTO: And they have told you that?
CAVUTO: So, have they also told you that these important matters that they would limit themselves to, what those important matters would be?
HENDERSON: They — I think what the government is interested in is what any large shareholder — in this case, the U.S. taxpayer will be a 60 percent shareholder in General Motors. So, what do they want to know?
They want to know that there is a world-class board of directors. General Motors has had an exceptionally hardworking board of directors, in fact, a world-class board, in many ways, up to this point. But they have asked for a reconstitution of the majority of the board.
Kent Kresa, our interim chairman, is providing that leadership in terms of repopulating the board. They're going to want to make sure there's a world-class board in place overseeing the company, which represents their investment. And that board would be expected to hold management accountable for results.
CAVUTO: Mr. Henderson, you had also said earlier: We are reflating again.
I guess anyone who knows you knows you're pretty astute in what's going on in all the global markets, which I guess is why you have this job. But one of the things you had been noticing, and — and, of course, couldn't not notice, is the sudden run-up in energy prices.
Are you worried about that that, just as you're trying to get your feet back in this business, that's taken the rug out right from under them?
HENDERSON: We do watch oil prices and fuel prices regularly. Our plan is built around an expectation of economic growth having some — first of all, resuming — and, second, having an upward pressure on fuel prices as a result.
I have been told — I was told even as — a month ago that we were crazy, that that wouldn't happen. Well, it's happening, because, in fact, as economies begin to improve, you would expect to see some pressure on — on — on oil.
And — and so, our plan, and frankly, our product portfolio, our technology plan, is all based upon an expectation of higher fuel prices longer-term, which you know, we will be ready for that environment.
CAVUTO: The Volt is something that will get the benefit of, I think, Mr. Henderson, a $7,500 tax credit...
CAVUTO: I think it is one of the few vehicles that would get such treatment.
Are you getting that treatment because you have been rescued by taxpayers?
HENDERSON: No. No, that — that — that tax credit's actually applicable to the type of technology included in the Volt, has nothing to do with — with the support we're being provided by the U.S. taxpayer today.
CAVUTO: All right, because these are the type of cars, as you know, Barack Obama wants to see you build and the auto task force wants to see you build.
But what if the market is such that no other folks want to see — see them in their garage? Then — then...
CAVUTO: ... are you free to — are you free to change? Are you free to build bigger, more gas-consuming vehicles and not these type of vehicles?
HENDERSON: Well, the — the law of the land, in terms of fuel economy — and just recently, for example, three or four weeks ago, there was a groundbreaking agreement, if you will, between several states, including California, several departments of the — of the federal government on harmonizing fuel-economy standards going forward, fuel-economy standards, and — and — and tailpipe emissions.
This is all about improving the fuel economy of all of our vehicles. So, it's not about just simply building small cars in order to meet a fleet average. It's about every one of our vehicles in our — in our lineup, whether it's large pickups, down to small cars, each one of those pulling its weight in the overall fuel-economy-improvement equation. And we're ready to do that.
CAVUTO: All right, but, again, something else you presumably do not have to check with the government is a realization, maybe a year or two down the road, that, these are the vehicles, sorry, Mr. President, they do not want.
HENDERSON: I would say — well, first of all, it's our expectation, if I reflect on that question about three or four minutes ago about fuel prices, that the view is — our view is that fuel prices will rise as economic growth resumes.
But, nonetheless, I mean, we do think we will have a full array of product applicable across the range for consumers, number one. And, number two, each of those products will improve in their fuel economy going forward. That's our...
HENDERSON: That's our commitment.
CAVUTO: Sir, I would be remiss if I didn't mention this House letter by some 20-odd congressmen, led by Representative Jeb Hensarling, who had said — and I'm — I'm quoting here, I hope accurately — "The proposal seems to favor" — that is, your bankruptcy proposal — "the rights and claims of the UAW, a political ally of the administration and a powerful lobbying force in Washington, over the rights and claims of the company's diverse group of bondholders."
And they're ticked off. What do you think of that?
HENDERSON: Well, a couple things.
First of all, this is a transaction — the 363 transaction is an acquisition of the — the good assets of General Motors by a consortium of investors led by the U.S. Treasury. Like any purchaser of a company, the — the purchaser has the — has the ability to decide what liabilities it chooses to take on as part of looking at the assets it wants to take on.
In this case, as — and, as part of this, we negotiated a labor agreement with the — with the UAW and the CAW, because we need — we need to have a labor agreement. That agreement will be assigned to the new company. And, in fact, what was done late in the process, even late last week, was, we — we embarked after Thursday in a process to go back out to bondholders with an improved offering to them.
What the Treasury said was, if there was adequate support, the — that they would be provided not only 10 percent of the company, and that company would be substantially de-levered from what they had seen, for example, a month before, number two, two sets of warrants which had potential value if the company delivers it — delivers on its business plan.
And, in the end, just recently, for example, the government had notified us that approximately over 54 percent of bondholders, or the majority of bondholder, had suggested that this is something that they would support.
So, when they go on to say the contractual rights of investors are being trampled on by the government under the rationale of extraordinary circumstances — in other words, saying that you had been sort of snowballed into this and heavy-armed into this — you say what?
HENDERSON: We don't agree.
CAVUTO: Last question. You talk about senior management changes in the next 60 to 90 days. Do they include you? Will you leave in 60 to 90 days or do you want to see this through?
HENDERSON: Oh, I'm planning to see it through.
I'm working — our — our leadership, if you will, is working around the clock, including myself. And we are 100 percent focused on getting GM through the bankruptcy process — excuse me — getting the 363 transaction completed through the bankruptcy process, and — and building a successful General Motors going forward.
And I personally don't worry one — at all about myself.
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