General Motors 2010 Annual Report Download - page 129

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
363 Sale
On July 10, 2009 we completed the acquisition of substantially all of the assets and assumed certain liabilities of Old GM and
certain of its direct and indirect subsidiaries (collectively, the Sellers). The 363 Sale was consummated in accordance with the
Amended and Restated Master Sale and Purchase Agreement, dated June 26, 2009, as amended, (Purchase Agreement) between us
and the Sellers, and pursuant to the Bankruptcy Court’s sale order dated July 5, 2009.
In connection with the 363 Sale, the purchase price paid to Old GM was composed of:
• A credit bid in an amount equal to the total of: (1) debt of $19.8 billion under Old GM’s UST Loan Agreement, plus notes of
$1.2 billion issued as additional compensation for the UST Loan Agreement, plus interest on such debt Old GM owed as of the
closing date of the 363 Sale; and (2) debt of $33.3 billion under Old GM’s DIP Facility, plus notes of $2.2 billion issued as
additional compensation for the DIP Facility, plus interest Old GM owed as of the closing date, less debt of $8.2 billion owed
under the DIP Facility;
• The UST’s return of the warrants Old GM previously issued to it;
• The issuance to MLC of 150 million shares (or 10%) of our common stock and warrants to acquire newly issued shares of our
common stock initially exercisable for a total of 273 million shares of our common stock (or 15% on a fully diluted basis); and
• Our assumption of certain specified liabilities of Old GM (including debt of $7.1 billion owed under the DIP Facility).
Under the Purchase Agreement, we are obligated to issue Adjustment Shares to MLC in the event that allowed general unsecured
claims against MLC, as estimated by the Bankruptcy Court, exceed $35.0 billion. The maximum number of Adjustment Shares
issuable is 30 million shares (subject to adjustment to take into account stock dividends, stock splits and other transactions). The
number of Adjustment Shares to be issued is calculated based on the extent to which estimated general unsecured claims exceed $35.0
billion with the maximum number of Adjustment Shares issued if estimated general unsecured claims total $42.0 billion or more. In
the period July 10, 2009 to December 31, 2009 we determined that it was probable that general unsecured claims allowed against
MLC would ultimately exceed $35.0 billion by at least $2.0 billion. In the circumstance where estimated general unsecured claims
equal $37.0 billion, we would have been required to issue 8.6 million Adjustment Shares to MLC as an adjustment to the purchase
price. At December 31, 2009 we recorded a liability of $162 million included in Accrued liabilities. In the year ended December 31,
2010 the liability was adjusted quarterly based on available information. Based on information which became available in the three
months ended December 31, 2010, we concluded it was no longer probable that general unsecured claims would exceed $35.0 billion
and we reversed to income our previously recorded liability of $231 million for the contingently issuable Adjustment Shares.
Agreements with the UST, EDC and New VEBA
On July 10, 2009 we entered into the UST Credit Agreement and assumed debt of $7.1 billion maturing on July 10, 2015 that Old
GM incurred under its DIP Facility (UST Loans). Immediately after entering into the UST Credit Agreement, we made a partial
prepayment, reducing the UST Loans principal balance to $6.7 billion. We also entered into the VEBA Note Agreement and issued a
note in the principal amount of $2.5 billion (VEBA Notes) to the New VEBA. Through our wholly-owned subsidiary General Motors
of Canada Limited (GMCL), we also entered into the amended and restated Canadian Loan Agreement with EDC, as a result of which
GMCL has a CAD $1.5 billion (equivalent to $1.3 billion when entered into) term loan (Canadian Loan).
In December 2009 and March 2010 we made quarterly payments of $1.0 billion and $1.0 billion on the UST Loans and GMCL
made quarterly payments of $192 million and $194 million on the Canadian Loan. In April 2010, we used funds from our escrow
account to repay in full the outstanding amount of the UST Loans of $4.7 billion, and GMCL repaid in full the outstanding amount of
the Canadian Loan of $1.1 billion. Both loans were repaid prior to maturity. On October 26, 2010 we repaid in full the outstanding
amount (together with accreted interest thereon) of the VEBA Notes of $2.8 billion.
General Motors Company 2010 Annual Report 127