Survival Warehouse

Please check out our Sponsor Survival Warehouse!

They are dedicated and devoted to providing the best Survival & Preparedness Gear available. They have been around for decades and really excel in the Long Term Food Storage Category.

See more
See less

GM Posts Massive Loss, Auditor May Question Viability

  • Filter
  • Time
  • Show
Clear All
new posts

  • GM Posts Massive Loss, Auditor May Question Viability

    General Motors Corp posted a loss of nearly $31 billion on Thursday for 2008 and said its auditors were likely to cast doubt on its viability as it seeks an expanded federal bailout to stay afloat.

    GM posts massive loss, auditor may question viability
    Thu Feb 26, 2009 9:45am EST

    By Kevin Krolicki and David Bailey

    DETROIT (Reuters) - General Motors Corp posted a nearly $31 billion loss on Thursday for 2008 and said its auditors were likely to cast doubt on its viability as it seeks an expanded federal bailout to stay afloat.

    GM, which asked for up to $30 billion of U.S. government aid, posted losses in all of its major units during the fourth quarter and it burned through $6.2 billion of cash. Revenue plunged by more than a third.

    The automaker also warned its pension plans for hourly and salaried workers were underfunded by about $12.4 billion as of the end of 2008, raising the risk of an even greater funding gap in the years ahead.

    The release of the grim results came on the same day that GM Chief Executive Rick Wagoner and other senior executives were scheduled to meet with members of the task force headed by U.S. Treasury Secretary Timothy Geithner and White House economic adviser Larry Summers.

    "They are in fact-gathering mode right now, and so we are here in order to respond to their questions," GM Chief Financial Officer Ray Young told reporters.

    "This is not a negotiation session by any means, they are going to continue to gather facts and continue to ask for clarifications in terms of our submissions," he said.

    Shares of GM dropped 8 percent in pre-market trade to $2.35.

    GM said it could receive a "going concern" notice from auditors when it files its annual report for 2008 with U.S. securities regulators by the middle of March.

    The company, which took $6 billion in charges to shut down North American plants as sales tumbled last year, posted a net loss of $30.9 billion for 2008.

    That marks the second-largest loss for the 100-year-old automaker behind only the $38.7 billion loss for 2007. GM has lost $82 billion over the past four years and cut 92,000 jobs over that period.

    GM ended December with $14 billion in cash and including the first $4 billion in loans received from the U.S. Treasury. It received another $9.4 billion in aid in the current quarter.

    GM's fourth-quarter net loss widened to $9.6 billion from $722 million.

    Excluding $3.7 billion in one-time charges, GM posted a quarterly loss of $9.65 cents per share. Analysts surveyed by Reuters Estimates had forecast a loss per share of $7.40 on that adjusted basis.

    Revenue fell to $30.8 billion from $46.8 billion.

    Young said the deep loss for the fourth-quarter reflected how a slump in auto sales that began in the U.S. market had become a global crisis. GM posted losses on its auto operations in every region in the quarter, including Asia.

    "When we talk about contagion, what we saw was that the credit crisis was starting to spread," Young told reporters.

    Analysts have said the key to valuing GM's shares and debt is the progress the company is making in crucial restructuring talks with creditors, including the United Auto Workers union.

    Existing shareholder equity could be sharply diluted as existing bondholders and the union are offered shares in a recapitalized company in an attempt to reduce GM's cash drain from its debt obligations.

    GM has said it needs the next round of government funding as soon as next month as it struggles to restructure. GM cut 19,000 jobs in the United States and another 4,000 jobs in other regions in 2008.

    GM, like its smaller rival Chrysler LLC, faces pressure to wrap up concession talks with the UAW on how to cut funding promised to a healthcare trust fund.

    GM has offered the UAW up to $10.2 billion in new equity in order to give up a cash claim on half of the $20.4 billion it is owed for the trust fund.

    The UAW reached a deal with Ford Motor Co this week on terms to restructure its own retiree healthcare debt to the union on similar terms.

    But GM's parallel negotiations with its bondholders have been more difficult. GM bondholders have been asked to take a payout equal to just $9 billion of the $27 billion that they are collectively owed.

    Representatives of the debtholders have said GM's plan does not go far enough to reduce the automaker's debt and have asked for steps to safeguard their remaining investment in the company.

    Young said GM could not comment on its negotiations with bondholders ahead of an end-March deadline to launch the debt exchange.

    "We are getting to a more sensitive stage in terms of the whole bond exchange process here," he said. "From our perspective, we are marching toward the March 31 deadline."

    (Reporting by Kevin Krolicki and David Bailey; Editing by Derek Caney)

  • #2
    I believe that our country needs our own automobiles, and I hate to think of all the workers who would be affected by a bankruptcy of this company. BUT...they have not kept up with new tech, they have not handled their business correctly. This means that they either fix it or go under, that is the nature of business. GM has had an attitude of entitlement because so much depends on our auto industry. That ain't cutting it any more.