GM Liquidity Plunges Below $10 Billion - Source
June 01 2009 - 10:41AM
Dow Jones News
General Motors Corp.'s (GM) liquidity has plunged below $10
billion, a person familiar with the situation said Monday,
underscoring how broken the auto maker's business model had become
amid plunging auto sales and tough competition from global auto
makers.
The a newly bankrupt auto maker's cash levels are now well below
how much it would need to operate on its own. Without the $20
billion in U.S. government loans GM received, the picture would be
far worse.
GM had more than $24 billion in liquidity at the end of the
first quarter a year ago, as the company's non U.S. operations
helped offset multi-billion dollar losses in North America. At the
end of March, GM had $11.6 billion in liquidity that was largely
offset by federal loans.
The auto maker's cash burn accelerated in the last year as it
slashed production and grappled with a global sales slump.
GM's restructuring plans, as dictated by the Obama
administration, call for slashing GM's $74 billion in debt to $17
billion.
As part of the plan, GM's secured lenders would get par
recovery. The company isn't anticipating tension from the lenders,
the person familiar said.
When the "New GM" emerges from Chapter 11, this person said,
most of the company's suppliers contracts will remain intact.
GM, which suggested it may move its headquarters from Detroit's
Renaissance Center, will remain in the beleaguered city, this
person said.
-By Sharon Terlep, Dow Jones Newswires; 248-204-5532,
sharon.terlep@dowjones.com