By Justin Hyde • Free Press Washington Staff • June 4, 2009

WASHINGTON – General Motors Corp. expects to return to annual profits in 2011, and estimates stock in the new company it will launch from bankruptcy will be worth $38 billion to $48 billion.

According to financial estimates filed today as part of its bankruptcy case, the new GM will count on a rebound in U.S. vehicle sales to about 16 million a year by 2012 to pull it back into profitability, pumping up its output from 3.8 million vehicles worldwide this year to 6 million by 2014.

The company’s financial adviser, Evercore Partners, offered projections for GM’s finances in its bankruptcy case based on several estimates of sales and revenues. It forecasts that GM will lose $17.5 billion this year before swinging to a profit of $3 billion in 2011 before taxes, rising to $7.8 billion in 2014.

The figures suggest that the Obama administration’s 60.7% stake in GM would be worth up to $29 billion after bankruptcy. Combined with $8.8 billion in debt and preferred shares, the government would still be about $12 billion short of the $50 billion in loans it has pledged to GM.

The administration has warned that it would likely have to write off the $19.4 billion it lent GM before it filed this week, but that it hoped to make up much of the other loans by selling its equity stake.

The 17.5% stake held by the UAW trust fund for retiree health care would be worth up to $8.4 billion. Combined with $9 billion in debt and preferred shares, the trust fund would hold $17.4 billion, shy of the $20 billion it was owed before bankruptcy. The union has cut health-care benefits for retirees, and warned future cuts could come over the next two years.

Bondholders carrying $27 billion of old GM’s debt would get a 10% stake worth $3.8 billion to $4.8 billion. Those investors could also buy additional GM shares; the company contends the bondholders would get nothing were GM broken up and sold in pieces.

GM executives and administration officials have said the bankruptcy would let GM make money in a market like the one it’s suffering through today – with 19.5% market share and U.S. vehicle sales running near 10 million cars and trucks a year.

The Evercore estimates predict GM’s revenues per vehicle will actually decline slightly through 2014, and that the company would still be profitable even if U.S. market share fell to 17%.

Contact Justin Hyde at 202-906-8204 or jhyde@freepress.com. | freep.com