GM Paid Advisers AlixPartners, Evercore $62.2 Million

GM Paid Advisers AlixPartners, Evercore $62.2 Million

By Christopher Scinta

June 4 (Bloomberg) — General Motors Corp. paid financial advisers AlixPartners LLP $38.1 million and Evercore Partners Inc. $24.1 million in fees before filing bankruptcy this week.

The automaker, based in Detroit, will owe investment boutique Evercore another $13 million if it closes the planned sale of most of its assets to an entity controlled by the U.S. Treasury, according to a declaration by Evercore Managing Director J. Stephen Worth filed today in U.S. Bankruptcy Court in New York.

Evercore, based in New York, will also receive a fee of $2.5 million for advising GM on the $33.3 billion bankruptcy loan from the Treasury, subject to approval by U.S. Bankruptcy Judge Robert Gerber in Manhattan, according to Worth’s statement.

Evercore advised GM the offer from the Treasury-funded Vehicle Acquisition Holdings LLC is financially fair. That determination was partly based on an analysis from AlixPartners that states GM would get from $6.5 billion to $9.7 billion for its assets in a liquidation, according to a separate statement filed with the court by Albert Koch, who is GM’s Chief Restructuring Officer and AlixPartners managing director.

Market Value

Based on today’s closing bond prices and a formula prepared by Deutsche Bank, the new GM’s market value would be about $31.1 billion, once the company has restructured.

According to Koch’s analysis, in a liquidation, GM’s secured bank lenders would recover from 26.3 percent to 77.1 percent of the $5.4 billion they are owed and the Treasury would get back 12.7 percent to 23.7 percent of its $20.5 billion in claims. Unsecured creditors owed more than $116 billion by GM wouldn’t receive any recovery in a liquidation, AlixPartners projected.

GM previously hired Evercore in mid-2008 to advise the company on its relationship with former part-making unit Delphi Corp., which is also in Chapter 11. GM has paid Evercore $5.5 million related to the Delphi project, according to the declaration.

Koch said in his statement that AlixPartners received a $20 million retainer from GM before the bankruptcy and agreed to waive any unpaid pre-bankruptcy fees greater than that amount.

GM filed bankruptcy June 1 after it was unable to reorganize outside of court and reported debt of $172.8 billion, more than twice its assets.

The case is In re General Motors Corp., 09-50026, U.S. Bankruptcy Court, Southern District, New York (Manhattan).

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