Taxpayer rape continues
GM Probably Needs $4.6 Billion U.S. Loans Before June (Update1)
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 when funding, needed for operations, would be
required. GM in February asked for as much as $16.6 billion in
additional loans, including the $4.6 billion in this quarter. GM is
still developing its restructuring plan with U.S. Treasury officials to
try to avoid bankruptcy.
“We’ve been working with the Treasury alongside us,” Henderson said.
“It’s much like a private equity due-diligence process. We’re taking the
watch apart step-by-step and rebuilding.”
GM will file for bankruptcy protection unless it can restructure out of
court by June 1, Henderson said. The automaker is considering the
financial implications of all its operations after the Obama
administration said last month that GM’s initial plan to cut costs and
keep a government loan isn’t sufficient. Henderson says the company is
talking with debt holders and unions to get deeper cuts.
GM is developing a proposal to bondholders as fast as possible, “so
think of this as April timing,” Henderson said.
The Detroit-based automaker decided not to sell its AC Delco parts unit
and has about three bidders for its Hummer brand, Henderson said. GM
said it has several parties interested in buying its Saturn and Saab
brands and at least six entities weighing 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.
GM must slash United Auto Workers health-fund obligations to less than
$10.2 billion from $20.4 billion and bond debt to less than $9.2 billion
from $27.5 billion, amounts proposed in the now-rejected plan, or face a
government-backed bankruptcy. The issues will probably be resolved along
similar timelines, he said.
“We have continued dialogue with the UAW on a whole host of issues,”
Henderson said, adding that the union’s need to secure an agreement with
Chrysler LLC is slowing GM talks. “While our dialogue is open, I would
expect we’d be able to pick up the pace here in the next couple of weeks.”