Reply #95: GM Says It May Run Out of Operating Cash This Year

[DemReadingDU]

11/7/08
GM Says It May Run Out of Operating Cash This Year (Update2)

By Jeff Green and Mike Ramsey

Nov. 7 (Bloomberg) -- General Motors Corp., seeking federal aid to avoid collapse, said it may not have enough cash to keep operating this year and will fall ``significantly short'' of the amount needed by the end of June unless the auto market improves or it raises more capital.

The largest U.S. automaker reported a $4.2 billion third- quarter operating loss today and said its available cash fell to $16.2 billion on Sept. 30 from $21 billion at the end of June. Merger talks with Chrysler LLC were suspended.

``GM is making a pretty direct plea for help,'' said Pete Hastings, a fixed-income analyst at Morgan Keegan Inc. in Memphis, Tennessee. ``The message is, `we've done all the things we can do, and we need help.' And if we don't get help, fill in the blank.''

The cash drain reflected the strain of a 21 percent slump in U.S. sales in the quarter as the credit freeze deepened. It also added urgency to U.S. automakers' request for government aid. The companies are asking for $50 billion in new loans, a person familiar with the proposal said.

Chief Executive Officer Rick Wagoner and the CEOs of Ford Motor Co. and Chrysler met yesterday with U.S. House and Senate leaders in Washington. Wagoner said GM also has been in contact with the staff of President-elect Barack Obama.

GM fell 58 cents, or 12 percent, to $4.22 at 1:53 p.m. in New York Stock Exchange composite trading. The shares tumbled 81 percent this year through yesterday.

more...
http://www.bloomberg.com/apps/news?pid=20601087&sid=aPtO113gTIUs&refer=home


edit to add CNN link:

GM: Almost out of cash
No. 1 automaker posts huge loss - says it has made case to Washington for rescue.
...most shocking news came in its statements about its cash position. GM said it had burned through $6.9 billion during the quarter and warned that it "will approach the minimum amount necessary to operate its business" during the current quarter.
In addition, the company said that in the first half of next year its "estimated liquidity will fall significantly short" of what it needs to continue operating. It said the only thing that would save it would be a significant improvement in economic and automotive industry conditions, help from the federal government, better access to capital markets or some combination of those options.
more...
http://money.cnn.com/2008/11/07/news/companies/gm/index.htm?postversion=2008110714