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| GM plans 'garage sale' for toxic plants |
| Bloomberg / New York Jul 03, 2009, 00:44 IST |
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As General Motors Corp prepares to sell its best assets to a streamlined new entity, the worst of what it owns will be auctioned off in bankruptcy court, including contaminated factory sites, parking lots in Flint, Michigan, and a nine-hole golf course in New Jersey.
One property the carmaker is ditching is a foundry in Massena, New York, bordered on the east by the St. Regis Mohawk Indian Reservation and on the north by the St Lawrence River. Built to make aluminum cylinder heads for the Chevrolet Corvair in the 1950s, it generated PCB sludge and waste from hydraulic fluids.
“It was created by GM dumping hazardous waste on the banks of the river, such that the waste oozed into the water and the land,” said John Privitera, a lawyer for the tribe at McNamee Lochner Titus & Williams PC in Albany, New York. “It was picked up by animals and moved up the food chain through fish and into Mohawk women — into their breast milk, into their babies.” The largest US automaker, following its smaller rival Chrysler LLC, is using the bankruptcy process to spin off a new entity with reduced costs and debt while leaving the old GM with unwanted property and obligations to creditors, dealers, retirees, accident victims and environmental agencies.
The discarded assets will be all that creditors have to satisfy their claims as GM starts to unwind liabilities of $172.8 billion — more than twice its reported assets.
The pollutants at the Massena site wound up in the St Lawrence River, migrated to the reservation and put the property in the New York State Registry of Hazardous Waste Sites and on the federal superfund list of contaminated places.
While the Massena site is eligible for federal cleanup money, according to Privitera, some of the cost may come out of creditors’ hide, a GM restructuring official testified.
It would cost GM as much as $225 million to clean up the site and restock the river with edible fish if it held on to the property, Privitera estimated.
At the first day of hearings on GM’s proposed asset sale restructuring chief Albert Koch estimated on June 30 that the company’s environmental liabilities for all sites are $530 million. Chief Executive Officer Fritz Henderson said money needed to wind down the old GM was $1.25 billion, up from an earlier estimate of $950 million, because of a reassessment of the environmental liabilities.
The Treasury has said it would leave sufficient cash in GM’s bankruptcy estate to fund a “wind down,” though it hasn’t provided a written commitment for more funding, Koch said. Without sufficient cash from the Treasury to cover any shortfall, old GM might have to sell some of the 10 per cent stake and warrants that it will get from the reorganised company as earmarked funds to pay off creditors, he said.
The golf course on GM’s hit list, the Hyatt Hills Golf Complex in Clark, New Jersey, was built on the reclaimed site of a factory that began by making hard rubber steering wheels and door handles for the automaker in 1938.
The Newark Star-Ledger called it the “best conditioned nine-hole course in New Jersey.” A Web site tour of the course shows parts of it abutting power lines, a railroad track and a line of telephone poles. Union County residents are charged $18 to play nine holes.
“The new GM hardly needs to be in the golf course business,” said Tom Wilkinson, GM’s director of news relations, in an e-mail. “The old GM will be selling a lot of potentially valuable but peripheral property the company accumulated over 100 years, kind of like a big garage sale. You will see some really good real estate deals come out of this for investors and communities.”
Calls seeking comment from Dan Hollis, Hyatt Hills’s golf operations manager, and Robert Hoeffler, executive director, weren’t returned.
Cleanup work already done on the Hyatt Hills site “should have taken care of any issues,” Wilkinson said.
New York Attorney General Andrew Cuomo on Wednesday recommended that the bankruptcy judge in charge of the GM case scrutinise the carmaker’s proposed asset sale to make sure environmental obligations aren’t avoided.
New York State in a court filing earlier listed 11 GM sites that have contamination or “ongoing environmental compliance obligations” such as cleaning up soil, sediment, surface and groundwater and long-term monitoring, including property in Syracuse, Rochester and Buffalo.
The company plans to leave behind 16 plants and associated real estate in Delaware, Ohio, New York, Indiana, Pennsylvania, Virginia and Michigan, as well as an industrial park in Anderson, Indiana, a former Cadillac site in Detroit, the parking lots in Flint, offices and an employee development center in Pontiac, Michigan, and 76 acres of vacant land in Van Buren, Michigan, among other discarded property.
The case is In re General Motors Corp, 09-50026, US Bankruptcy Court, Southern District of New York.
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