Old GM in deal for cleanup of former plants
Project aims to create jobs, revitalize communities.
Wed, Oct 20 2010 at 4:36 PM
FACTORY CLEANUP: Dealing with the environmental risks from former plant sites has been seen as one of the biggest hurdles to redeveloping them or turning them into parkland. (Photo: Bill Pugliano/Getty Images)
The Obama administration and 14 states on Wednesday struck a $773 million deal with the bankruptcy estate of General Motors to clean up environmental damage at 89 of its closed factories, clearing the way to sell the properties for redevelopment.
The proposed settlement with the estate, known as Motors Liquidation Co, includes establishing a trust with at least $641.4 million in cash plus $120 million in non-cash assets to pay for the environmental cleanup at the sites.
"This trust will create jobs not only through the direct hiring of clean up personnel, but also by generating private investment through locally-driven solutions that repurpose the sites toward new productive uses," said Labor Secretary Hilda Solis who also co-chairs a panel on helping auto communities.
The old-GM has already spent $11.5 million on cleanup efforts. The proposed settlement must be approved by a federal bankruptcy judge in New York.
GM filed for bankruptcy protection last year amid the global recession and a deep slump in the industry. The automaker cut thousands of jobs, dumped hundreds of its dealers, sold four brands and closed numerous facilities.
The settlement sets aside $431 million for cleanup at 89 GM factory sites left behind in bankruptcy. It also includes $68 million as a cushion against extra costs and some $142 million for administering the trust and restoring the properties for use, like demolition of buildings.
Fourteen states and one Indian tribe will get funds. Michigan has 56 sites, leading the list, with other sites in Illinois, Indiana, Kansas, Virginia, Wisconsin, New Jersey, Delaware, Massachusetts, Missouri, Pennsylvania, and Louisiana.
Included in the list is the automaker's sprawling Buick City complex in Flint, Michigan. Local officials in Flint have supported a plan to turn the site into a railroad and trucking transportation hub.
The biggest single chunk of funding — nearly $121 million — was set aside to cover environmental cleanup at the site of a now closed GM powertrain plant in Massena, New York.
"Ultimately, this is about jobs because as these sites are redeveloped, they will be attractive for new investment and new job creation," said Ohio Gov. Ted Strickland. About $39 million is set aside for five former GM manufacturing plants in Ohio.
Dealing with the environmental risks from its former plant sites has been seen as one of the biggest hurdles to redeveloping them or turning them into parkland.
As part of the bankruptcy proceedings, a shell called Motors Liquidation was formed and retained all of GM's old unwanted assets and liabilities.
The "new GM" — renamed General Motors Co — emerged from bankruptcy protection last year after completing a sale of GM's best assets such as Chevrolet and Cadillac to a new company funded by the U.S. Treasury.
The settlement agreement comes as the operating arm of the automaker that was sold to the U.S. Treasury in bankruptcy, prepares for an initial public stock offering next month.
The remnants of the old automaker are seeking bankruptcy court approval to complete the wind-down of the GM assets and claims left in bankruptcy when the sale of GM was concluded in July 2009.
In addition to transferring old-GM properties into an environmental trust, Motors Liquidation will handle the transfer of stock in the new GM to bondholders.
The case is In re: Motors Liquidation Company, case No. 09-50026 (mega-docket) in the U.S. Bankruptcy Court for the Southern District of New York.
(Additional reporting by Bernie Woodall and Kevin Krolicki in Detroit; editing by Lisa Von Ahn, John Wallace and Carol Bishopric)
Copyright 2010 Reuters Environmental Online Report