General Motors Corp said on Wednesday it had received a delayed payment of $5.4 billion under the emergency funding provided by the US government to keep it in business.
“GM confirmed that it did receive today the second draw of its US Treasury loan,” GM spokeswoman Renee Rashid-Merem said. GM Chief Operating Officer Fritz Henderson said late on Tuesday that the automaker would have run out of cash and faced bankruptcy if it had not been given the second loan tranche from the US government.
The loan payout was the second in a total of $13.4 billion pledged to General Motors by the US Treasury. GM has now received $9.4 billion of that amount and expects to get a final $4 billion payment on February 17 when it faces a deadline to submit a restructuring plan to Congress.
GM had expected to receive the $5.4 billion payment last Friday but said this week that the payment was delayed by paperwork it was asked to complete and the press of other funding issues for Treasury officials.
The government has pledged to loan $13.4 billion to GM for three years provided that it demonstrates that it has a plan to pay back the loans and become viable. Under the program, GM faces an initial February 17 deadline to show its progress.
The bailout requires GM to seek deep concessions from bondholders and the United Auto Workers union in order to cut both its debt and hourly wage costs. GM’s bondholders and the company have each hired advisers on how to complete a debt-to-equity exchange that the automaker expects will reduce its unsecured US debt to $9 billion from nearly $28 billion.
The company also plans to halve the $20 billion it has promised to a health care trust fund affiliated with the UAW by offering equity instead of cash.
Henderson said late Tuesday that while GM had been in contact with the UAW and bondholders, executives were focused first on updating the automaker’s own restructuring plan based on expectations for weaker auto sales in 2009.
Last week, the automaker cut its forecast for 2009 US auto sales, saying it expected sales to drop to their lowest level in 27 years at 10.5 million vehicles.
GM posted sales for 2008 earlier on Wednesday showing that it had lost the title of the world’s largest automaker to rival Toyota Motor Corp. GM’s global sales dropped 11% in 2008. Toyota’s sale were down only 4%. GM had held the title of global sales leader for the past 77 years. (Reuters)