October 12, 2011

Recovery Report:

General Motors Co.s Recovery Rating Profile

Primary Credit Analyst: Robert Schulz, CFA, New York (1) 212-438-7808; robert_schulz@standardandpoors.com Recovery Analyst: Gregory Maddock, New York (1) 212-438-7205; greg_maddock@standardandpoors.com

Table Of Contents
Overview Legal And Structural Considerations Issuer Credit Rating Rationale Recovery Analysis

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Recovery Report:

General Motors Co.s Recovery Rating Profile

Overview
We are raising our issue-level rating on General Motors Holdings LLC's (GM Holdings) senior secured revolving credit facility maturing in 2015. GM Holdings is a wholly owned subsidiary of U.S. auto manufacturer General Motors Co. (GM). GM's financial profile reflects modest funded debt but significant pension liabilities. Standard & Poor's Ratings Services' simulated default scenario contemplates a default occurring in 2015, with a continued weak U.S. economy leading to a recession that deepens in 2014--along with economic weakness in much of Western Europe, South America, and China.
Table 1

General Motors Co.--Credit Profile

Corporate credit rating as of Sept. 30, 2011 Estimated gross enterprise value at default Simulated year of default Facility/issue Secured debt US$5 bil. ABL revolving credit facility Domestic subsidiary financing International secured facilities Unsecured debt International unsecured facilities
NR--Not rated. N/A--Not applicable.

BB+/Stable/-$18,928 mil. 2015 Outstanding principal at default (mil. $) 5,000 400 1,500 Issue rating BBB NR NR Expected recovery Recovery rating (%) 1 NR NR 90-100 N/A N/A Maturity 2015 Various Various

2,000

NR

NR

N/A

Various

(For Standard & Poor's recovery rating methodology, see "Criteria Guidelines For Recovery Ratings," published Aug. 10, 2009, on RatingsDirect on the Global Credit Portal.)

Legal And Structural Considerations

GM is a U.S.-domiciled automaker with manufacturing subsidiaries and joint ventures worldwide. The company is the successor to General Motors Corp. (GMC), which, along with three domestic subsidiaries, filed for bankruptcy protection on June 1, 2009. The new company was formed at the direction of the U.S. Treasury. On July 10, 2009, it acquired substantially all of the assets of GMC and assumed certain GMC liabilities (primarily pensions) using the section 363 sale provision of the Bankruptcy Act.

Capital structure
GM's capital structure is substantially unleveraged, and its principal liability is unfunded pensions. The company has several smaller facilities available to its international subsidiaries and joint ventures. The revolving credit facility

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provides liquidity for working capital. The revolving credit facility permits additional senior secured first-lien debt, provided the borrowing base coverage ratio is at least 1.2:1.0 after incurrence. Additionally, second-lien debt is generally permitted, but second-lien debt maturing prior to the revolving credit facility is limited to $3 billion (excluding amounts that could be borrowed pursuant to the Energy Independence and Security Act of 2007). We assumed no additional loan amounts in this analysis. The facility also permits up to $2 billion in non-loan exposure--including hedging, letters of credit, and cash-management exposure--to be secured on a first-lien basis, provided the borrowing base coverage ratio is at least 1.0:1.0 after incurrence. Our default scenario assumes that there are $300 million of such claims at default.

Security and guarantee package

The senior secured revolving credit facility is secured by the assets of material domestic subsidiaries (excluding cash and finance subsidiaries), the stock of most domestic subsidiaries, intercompany notes, and 65% of the stock of most first-tier foreign subsidiaries. GM's significant interest in foreign joint ventures is not pledged. GM and all material domestic subsidiaries guarantee the facility.

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Recovery Report: General Motors Co.s Recovery Rating Profile

Documentation/covenants
Revolving credit facility availability is subject to compliance with a borrowing base. The borrowing base formula includes certain tangible assets at customary advance rates and limits eligible technology and trademarks to the lesser of $3.75 billion or 25% of the borrowing base, subject to a floor of $2 billion. In addition, liquidity (including revolving credit availability) must exceed $2 billion domestically and $4 billion globally.

Jurisdictional/insolvency regime issues

Although GM operates globally, its $5 billion revolving credit facility is issued in the U.S. As a result, if the company were to file for bankruptcy protection, we would expect the parent and domestic manufacturing subsidiaries to file in the U.S. and foreign subsidiaries to remain outside of the reorganization process, as was the case previously.

Issuer Credit Rating Rationale

See Standard & Poor's research update on General Motors Co., Sept. 29, 2011.

Recovery Analysis
Table 2

General Motors Co.--Stressed Valuation

--Simulated default assumptions-Year of default Last 12 months 2011 EBITDA EBITDA decline at default EBITDA at default LIBOR/margin rise 2015 $13,195 mil. 64% $4,732 mil. 200 basis points ABL facility debt Recovery expectation Secured first-lien debt Recovery expectation Unsecured notes Recovery expectation
Note: All debt amounts include six months of prepetition interest. N/A--Not applicable.

--Simplified waterfall-Gross enterprise value at default Administrative expenses Net enterprise value at default Priority claims $18,928 mil. $1,704 mil. $17,225 mil. $687 mil.

Implied enterprise value/EBITDA multiple 4.0x

Net enterprise value available to creditors $16,538 mil. $5,188 mil. 90%-100% $1,967 mil. N/A $2,070 mil. N/A

Simulated default scenario

Our simulated default scenario contemplates a default occurring in 2015, stemming from a continued weak U.S. economy marked by low consumer confidence, declining discretionary income, and tightening credit markets--all leading to a recession that deepens in 2014--coinciding with economic weakness throughout much of Western Europe and, to a lesser extent, South America and China. Under our default scenario assumptions, GM would be unable to replace the profitability associated with light trucks and full-size pickups, despite substantial product-mix adjustments. In addition, the company would be unable to sufficiently reduce production costs for smaller cars, which would further constrain its profitability. We believe that GM might restructure its obligations in bankruptcy while its cash balances remain substantially higher than the

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$4 billion global minimum cash and liquidity requirement in its secured credit agreement. However, we did not include excess cash in our valuation, because we believe that the company would use such cash during the restructuring process following bankruptcy. We have also assumed the following: LIBOR increases by 200 basis points (bps), to 250 bps; EBITDA declines 64% from the latest 12 months ended June 30, 2011, to $4.7 billion; The revolving credit facility is assumed to be extended in 2013 or 2014, and that facility and various local facilities would be fully drawn at default; and There are no additional first- or second-lien debt amounts.

Valuation
We believe that if GM were to default, its business model would remain viable, given its global footprint, its extensive manufacturing and engineering resources, and the need (albeit reduced) for vehicles. As a result, we believe that lenders would achieve greater recovery value through a reorganization rather than through a liquidation of the company. In arriving at an enterprise valuation, we used a 4x multiple of EBITDA at default. We did not assign any value to the EBITDA or net worth of financial subsidiaries and affiliates, nor did we include any of their debt obligations in calculating the insolvency proxy. The valuation multiple of 4x reflects the cyclical nature of automotive manufacturing, the high and continuing capital investment required, and the low adjusted EBITDA margins achieved even in very profitable times after considering capital expenditures. The company's gross enterprise value at default in our simulation is $18.9 billion. Other assumptions include: The EBITDA contribution at default will be 60% for domestic operations, 15% for pledged foreign operations, and 25% for other unpledged operations. Local foreign debt plus accrued interest expense will total $5.1 billion at default. This debt would be treated as a priority claim on the enterprise value at subsidiaries that have local debt. Priority claims will total $687 million (primarily from capitalized leases we assumed would be affirmed). There will be $300 million in cash-management and hedging claims that would be considered a first-lien obligation. We estimate about $3.1 billion in nondebt unsecured claims (which consist primarily of rejected operating leases and unfunded other postretirement employee benefits for domestic non-United Auto Workers personnel). We estimate administrative expenses of 9% of the gross enterprise value.

Outcome
Our estimate of net enterprise value at default is $17.2 billion. However, the value available to senior secured lenders would be $9.1 billion. The $9.1 billion reflects reductions to net enterprise value for local priority claims and the unpledged value of foreign subsidiaries. We estimate senior secured revolving credit facility claims at default of $5.2 billion (the revolving credit facility outstanding plus six months of accrued interest) and other first-lien claims of $712 million (including six months of accrued interest and $300 million in cash-management claims). As a result, we believe that senior secured lenders could expect very high (90% to 100%) recovery in the event of a default.

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