If this story from Automotive News is correct, then GM folks in the US and Saab in Sweden ought to brace for an organised GM bankruptcy proceeding.
I can’t see them needing $16billion by March and surviving the March 31 deadline for viability.
There’s a little bit about Saab later on….
DETROIT — GM asked the federal government today for an additional $16.6 billion in federal aid to help it survive. Without the new funding, the automaker could run out of money sometime in March.
Under the plan submitted to the Treasury Department, GM loans and lines of credit would total $30 billion.
GM would also cut 47,000 jobs globally by year end and close five U.S. plants by 2012. It raised the possibility of killing the Saturn brand when production of its current models ends in 2012.
GM will receive the last installment of a previously approved $13.4 billion loan today, but is requesting another $4.6 billion to meet its Dec. 2 request of $18 billion. It then will ask for $4.5 billion to help it repay a revolving line of credit coming due in the fall of 2011.
GM also is asking for a $7.5 billion revolving line of credit to help it if auto sales worsen later this year or next year. GM plans to start repaying the loans in 2012.
The proposals are contained in a restructuring plan made public by GM today. Both GM and Chrysler LLC were required to deliver plans to the Treasury Department today. Chrysler is asking for an additional $2 billion in loans.
The plans fall short of the government’s original requirements in some regards. Although the UAW announced late today that it had reached agreement on concessions with the Detroit 3, GM still is negotiating with bondholders.
Under terms of loan agreements approved by the Bush administration in December, the plans must show how the companies will become viable for the long-term and be able to repay federal loans.
GM’s plan outlines how the company proposes to achieve a “sustainable return to profitability” within the next 24 months, sources familiar with the plan say.
Of the 47,000 jobs to be cut this year, 37,000 will be hourly.
GM plans to continue to supply current product to Saturn through 2012. But absent an alternative to fix the brand, GM expects to phase it out.
Hummer, which GM has had for sale since June, has attracted several interested parties. GM expects to make a decision on what to do with Hummer by the end of the first quarter, the sources say.
GM is in talks with the Swedish government and several other parties about Saab’s future. Without funding help from the Swedish government, Saab would have to file for reorganization, the sources say.
Among other things, GM was told to get bondholders to accept stock in exchange for debt, and the companies were advised to trim worker compensation to the level of the U.S. plants of import brands, or explain how comparable savings would be achieved.
The Obama administration has yet to indicate whether it is sticking with the terms and conditions set by the Bush administration or planning to change them.
The automakers’ loan agreements with the government provide that a presidential designee will certify by March 31 if the companies have met the restructuring criteria. If not, the loans are to be recalled immediately.
That deadline can be pushed back a month.
President Barack Obama had indicated he would name a so-called car czar to serve as designee, but the administration said over the weekend that it had changed course.
Treasury Secretary Timothy Geithner will serve as the designee. He also will co-chair with Obama’s chief economics adviser, Larry Summers, a task force that will evaluate the plans.
One relatively new name in the mix is Ron Bloom, an official of the United Steelworkers Union and former investment banker, known for brokering turnaround deals for struggling companies.
He will be an adviser to the Treasury Department on overhauling the auto industry.
Ford Motor Co. has said it may need loans if the economy grows significantly worse. Suppliers have requested $18.5 billion in aid.