GM May Still Require $4.6 Billion U.S. Loans in Second Quarter
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By Jeff Green
April 17 (Bloomberg) -- General Motors Corp., operating with $13.4 billion in U.S. loans, will probably still need $4.6 billion in additional aid this quarter, Chief Executive Officer Fritz Henderson said.
Henderson didn’t specify timing for when funding would be needed. GM had initially asked for as much as $16.6 billion in additional loans.
GM is still working with U.S. Treasury officials about its restructuring plan and trying to avoid bankruptcy, “much like a private-equity due-diligence process,” Henderson said on a conference call.
GM is considering the financial implications of all of its operations after the Obama administration said last month that GM’s initial plan to cut costs and keep a government loan aren’t sufficient. Henderson says talks continue with debt holders and unions to get deeper cuts as the automaker plans for both in and out-of-court restructuring.
The Detroit automaker has decided to keep its AC Delco parts unit and has about three bidders for its Hummer brand, Henderson said. GM also said it has several parties interested in buying its Saturn and Saab brands and investing in its German Opel unit.
To stay out of court protection, Henderson needs agreements from unions and debt holders for savings beyond GM’s Feb. 17 proposal for slashing $47 billion in unsecured claims by 59 percent.
GM plans to make a formal offer to bondholders by April 27 to exchange their $27.5 billion in claims for equity, according to a person with knowledge of the discussions. President Barack Obama’s automotive task force told GM to try to restructure its debt out of court, people familiar with the matter said.
To contact the reporter on this story: Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net
Last Updated: April 17, 2009 11:20 EDT
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This is a bottomless pit of debt.
