GM Expects Much-Needed Round of Cash in Days
The target date for General Motors to get its second installment of government loans passed last week, but a top company executive says he expects the money to arrive in the next several days.
Fritz Henderson, GM's president and chief operating officer, said without the second installment of $5.4 billion, the company would run out of cash long before March 31.
In December, the Treasury Department authorized $13.4 billion in loans for GM and another $4 billion for Chrysler to keep both automakers out of bankruptcy.
GM received $4 billion late last year and was to get $5.4 billion Jan. 16 and another $4 billion on Feb. 17, the day it is to submit its plan to show the government how it will become viable.
Henderson told the Automotive News World Congress in Detroit that the money is critically needed to pay its bills. He attributed the delay in receiving the second installment to the Treasury Department's workload and the change in administrations.
"If we don't get our second installment of the funding we'll run out of cash, it's that's simple," he said. "We've been finalizing what we need to do. We anticipate receiving it. But it's critical that we receive it."
Henderson also disagreed with United Auto Workers President Ron Gettelfinger who said on Monday that that a mid-February deadline for General Motors and Chrysler to complete their restructuring plans may be "almost unattainable" and that the automakers may have been set up to fail.
Henderson said the Treasury Department wouldn't have worked as hard as it did to provide the loans to GM and its financial arm GMAC if it was setting up failure, and he said he's confident GM can meet the Feb. 17 deadline to turn it its viability plan.
"It's a tight time frame. We're confident we can achieve all our milestones. Not everything has to be done by Feb. 17," he said.
By Feb. 17, the company needs to have a good sense of where it's headed in terms of getting concessions from bondholders and the UAW, Henderson said.
Although formal talks have not yet begun with the UAW, GM has supplied information and has been talking informally almost continually, he said.
He also said January U.S. sales were looking a lot like December, which was among the worst months in the past quarter-century.
And he told the group that GM will have four core brands in the future: Cadillac, Chevrolet, Buick and GMC.
GM is reviewing the Saturn brand with its dealers, is studying Saab and Hummer for sale and will shrink Pontiac to a performance niche brand.
Henderson also predicted that oil prices will rise rapidly once global economic activity recovers, justifying GM's electric car research spending.
GM is spending millions to develop the Chevrolet Volt, a plug-in vehicle that can go 40 miles on a single electric charge. After that, a small internal combustion motor kicks in to generate electricity for the car until it can be plugged in again. GM plans to bring the car to showrooms in late 2010.
Henderson also told the group of industry insiders at the annual gathering sponsored by the trade publication that it's not a big deal if GM is passed by Toyota Motor as the global sales leader for the first time in 77 years.
"To me the most important thing to make GM successful," he said. Any time spent on worrying about being passed by Toyota is "time wasted," he said.