General Motors Corp CEO Rick Wagoner said the struggling automaker had enough funding to last through March but could still seek additional US government loans beyond the $13.4 billion it has already been pledged.
Wagoner, speaking to reporters at the Detroit auto show, also said GM was still seeking a potential buyer for its Saab brand. “We’re still looking,” he said. GM had warned that it was at risk of running out of cash before the Bush Administration cleared its request for emergency funding just before the end of the year.
In recent weeks, some reports have said GM executives believed the $13.4-billion in US government loans would allow the automaker to survive even under its most dire forecasts for the US market in 2009. But Wagoner indicated GM could still opt to seek additional funding after a March review with US officials intended to assess its progress in restructuring.
“The $13.4 billion is consistent with what we asked for through the first quarter under our downside market scenario, which is the way the market is running,” Wagoner said. “We will obviously review the whole plan and at that point we’ll see what requirements are. But for now we think we’re well covered through the period we asked to be provided,” he said.
Under the terms of GM’s loan, the automaker faces a March deadline to demonstrate to US officials that it can be viable based on winning steep concessions from bond holders and the United Auto Workers (UAW) union.
GM has set a goal of reducing its debt by almost $36 billion by asking bond holders to swap out of existing debt for shares and by negotiating new terms for its promised $21 billion contribution to a trust fund for retiree health care that will be run by the UAW.
The loan program as structured by the Bush administration requires GM to seek to cut its debt by two-thirds and to negotiate sweeping changes to its UAW contract. UAW in 2007 made landmark givebacks to the industry, including GM.
This would include making its work rules and wages competitive with non-union US plants run by Japan’s major automakers, led by Toyota Motor Corp. But the UAW has objected to those terms as unfair, and a bill backed by Democratic leaders in the House of Representatives would strip the requirement for steep UAW givebacks from the auto bailout program.
GM is set to begin talks with representatives of the UAW this week in Detroit. “I think it’s fair to say everyone’s attitude has been cooperative,” Wagoner said. But the GM CEO stopped short of saying GM would be able to meet the specific targets for UAW concessions as outlined by the Bush administration. “They are defined as targets, and it’s indicated the importance of being competitive, and it’s my sense that we can do what we need to do,” he said.
Wagoner said GM and the auto industry stood to benefit if the incoming Obama administration’s plans for fiscal stimulus included some new tax credits or other support for car buyers. “These kinds of things could be helpful and I think this issue of consumer confidence goes well beyond the auto industry,” Wagoner said.
GM borrowed $4 billion from the US government on Dec. 31 and is eligible for another $5.4 billion on Jan. 16 and a final $4 billion loan installment on Feb. 17. US auto sales tumbled 18% in 2008, and GM’s sales dropped 23%. (Reuters)