Wednesday, May 13, 2009
GM bankruptcy 'looks more likely'
General Motors going into bankruptcy protection was looking more likely, the firm's chief executive has said.
Fritz Henderson added the task to avoid the measure was "large" - with his comments sending GM shares down 10%.
The US government has given GM a deadline of 1 June to restructure the business successfully if it wishes to gain more emergency loans.
GM has already warned it will probably need to enter bankruptcy protection if it cannot get the additional funding.
"Certainly the task that we have in front of us is large," Mr Henderson said, but added that there was "still an opportunity and still a chance for it to be done outside of a court process."
GM is continuing plans to close 2,600 of its 6,246 US dealerships - with a reduction in the network part of major cost-cutting plans at the firm, which hopes to reduce its $44bn (£29bn) debt mountain.
It has also not ruled out moving its base from Detroit.
Opel issue
Earlier Mr Henderson reiterated that the firm was in "urgent need of funding", despite having already been given $15bn in loans from the government since December.
Last month, General Motors confirmed that it would be cutting 21,000 jobs worldwide and shutting a number of factories in an effort to stay in business.
As part of the plan, GM is selling a number of its brands - Hummer, Saturn and Saab - and scrapping Pontiac entirely.
It is also in talks to sell its GM Europe business, which comprises Opel, Vauxhall and Saab.
Fiat is the front-runner to take over Opel and Vauxhall, although a number of stumbling blocks are emerging - not least from trade unions and governments, who fear any such tie-up could mothball a number of factories and cost thousands of jobs around the continent.
'Integral part'
Commenting on the prospect of Fiat taking over Opel and Vauxhall in Europe, and any resulting plant closures, Mr Henderson praised Vauxhall's plants in the UK for their "superb work", which he said was "an integral and a crucial part of the business".
He added, though, that he could not stipulate what any new investor in GM Europe would do with the factories.
The Canadian component manufacturer Magna is also in talks to take a substantial stake in GM Europe, and the BBC has learned that the Chinese car company SAIC is also negotiating with GM.
GM has said that while it would surrender control to a new investor in GM Europe, it would like to retain a stake in the business.
Back in the US, GM said it was also in talks with two potential buyers for its Hummer brand.
DATED: 13.05.09
FEED: AW
