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GM Cash Sufficient Amid `Savage' Stock Market, Henderson Says

March 18 (Bloomberg) -- General Motors Corp. has enough cash and doesn't expect any fallout from its ties to Bear Stearns Cos. after a liquidity crisis forced the Wall Street firm's sale, Chief Operating Officer Fritz Henderson said.

GM, the world's largest automaker, took advantage of favorable credit markets in 2006 to securitize a $4.48 billion credit line into 2011 that is available on top of other liquidity, Henderson said in an interview yesterday in Santa Monica, California, as GM's shares fell to a 25-year low.

``The markets in general are pretty savage,'' said Henderson, 49, who was chief financial officer until being promoted March 3. ``We are concerned, but it doesn't really change what we do on any given day.''

As CFO, Henderson spearheaded GM's efforts to squirrel away $27.3 billion in cash the last three years from sales of assets such as a majority of its GMAC LLC finance subsidiary and the former Allison Transmission unit. Detroit-based GM forecast using more cash than it generates for a third straight year in 2008.

GM, its investment company GM Asset Management and GMAC all have ``some form of activity with Bear Stearns, whether it's as a counterparty or an investor,'' Henderson said.

``I anticipate that what's been announced today will not change or affect any of those things,'' he said in yesterday's interview. GM had a good relationship with Bear Stearns, he added, including ``within the mortgage finance business.''

The run on Bear Stearns, Wall Street's fifth-largest securities firm, isn't a risk to GM, Henderson said. Bear Stearns's liquidity crisis initially spurred a rescue plan by JPMorgan Chase & Co. and then a sale for $2 a share.

``The speed with which the Bear Stearns situation played out over the last week or so was absolutely stunning,'' said Henderson, who was running GM's Latin American operations in the late 1990s when Brazil devalued the real and was at GMAC in the late 1980s when many U.S. savings & loans failed.

GM hasn't seen any ``contagion impact'' from Bear Stearns's crisis, Henderson said. ``We're not an investment bank and don't finance ourselves like an investment bank.''

GM has about $8.9 billion in committed credit facilities and another $1 billion in uncommitted lines, according to regulatory filings. The cornerstone of the untapped liquidity is the $4.48 billion arrangement from 2006, Henderson said. Another $152 million in credit arranged under the plan expires in June.

The credit line was GM's first ever to be secured by its assets, a step that became necessary when Standard & Poor's and other rating companies cut GM debt to non-investment grade in 2005. S&P now rates GM as B, five levels below investment grade.

S&P put GM, American Axle & Manufacturing Holdings Inc. and other auto-parts makers on CreditWatch yesterday for a possible downgrade after a United Auto Workers strike against American Axle entered its fourth week.
Henderson said GM doesn't have plans to intervene in the walkout at its largest axle supplier. Part or all of 29 GM plants have been idled by the labor dispute.

``We are losing production, but our view is as long as it's not impacting retail sales we believe we'll be able to recoup whatever production is needed to replenish our channels,'' he said. ``We'd like to see American Axle and the UAW arrive at a negotiated settlement.''

GM's 8.375 percent note due in July 2033 fell 2.06 cents yesterday to 68 cents on the dollar, the lowest price since January 2006, according to Trace, the NASD's bond-price reporting service. The yield rose to 12.6 percent.

GM slid 7.2 percent to $17.83 in New York Stock Exchange composite trading, the biggest one-day decline since November and the lowest closing price since October 1982.

Henderson said investors want to see the results of restructuring such as a four-year UAW contract reached in 2007 that GM forecasts will shave $5 billion in annual labor costs by 2011.

GM lost $39 billion last year, primarily from a tax accounting change, following deficits of $1.98 billion in 2006 and $10.4 billion in 2005. The automaker has already trimmed $9 billion from annualized costs since 2005

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aUAftPgRv._I
 

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Detroit Free Press 3-23-08

Even blogger Jim Dollinger, typically one of GM's harshest critics, says Henderson is the man who could turn GM's ship around. "I like Fritz Henderson and I'll tell you why," Dollinger said. "He's a Michigan man."

Dollinger, who regularly attends annual meetings and is known as Buickman on his GM watchdog Web blog, called General Watch, is full of criticisms and ideas for the automaker. But he had glowing words for Henderson.

"He's qualified, but we don't need qualified. Wagoner's qualified, but he doesn't get results. We need results," Dollinger said. "I like him because the man is a straight-talker, and his dad was a career sales and service manager for Buick. I trust this guy. I think he has intelligence, he knows what the solutions are and we're going to start seeing some changes for the better."

http://www.freep.com/apps/pbcs.dll/article?AID=/20080323/BUSINESS01/803230569

www.ronpaulforpresident2008.com
 

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GM slid 7.2 percent to $17.83 in New York Stock Exchange composite trading, the biggest one-day decline since November and the lowest closing price since October 1982.
So, now Ford's again worth more than GM on the stock market (actually, over a billion US$ more as of today).

I guess all of you GM fanboys are going to put your money where your mouth is and buy this bargain of a stock that's just about to finish completing a miraculous turnaround... right?
 
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