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GM May Need A Loan, And Soon
Joann Muller, 06.02.08
www.forbes.com


If conditions in the auto industry don't start improving soon, General Motors will have to start looking for coins between the seats of its vehicles.
The automaker currently has $24 billion in cash and another $7 billion in undrawn credit lines--plenty of liquidity, it says, to sustain its global operations through 2008. But will it be enough to limp through the economic downturn swamping the company's recovery efforts? Maybe not, say analysts, who expect General Motors may need to tap the credit markets for as much as $9 billion over the next two years.

Not as easy as it sounds. While credit markets are loosening up a bit, GM might have some difficulty selling bonds, says GimmeCredit.com's Shelly Lombard, because lenders are already heavily exposed to automotive debt from Ford Motor and Chrysler. "There's a price at which they can raise bonds," she says--12% to 13% yield, she figures--"but they probably don't want to pay that price."

More likely, she says, GM will seek less-expensive bank debt by offering assets (perhaps some of its healthier foreign subsidiaries) as collateral. Ford mortgaged virtually the entire company in fall 2006 to secure a $23 billion credit deal. "Even so, it's tough," says Lombard. "Banks are not in any condition to do a lot of leveraged lending right now. But if you can get anything done in this market, it's in the secured market."

GM officials aren't commenting on the eve of Tuesday's shareholders meeting, at which Chief Executive G. Richard Wagoner is expected to disclose various strategies to curb spending and conserve cash. J.P. Morgan Securities analyst Himanshu Patel says these might include eliminating the $600 million annual stock dividend, making salaried job cuts and other restructuring actions. On May 29, GM said 19,000 hourly workers (25% of its total) had agreed to take early retirement packages, which Patel says will save the company an estimated $2 billion.

GM keeps trying to adjust to a shrinking market, but the problem is that its recovery effort is running into severe headwinds company executives didn't anticipate: a worsening economy, higher prices for steel and other raw materials, and $4 gasoline, which is killing sales of its most-profitable trucks and sport utilities.

On top of that, says Lombard, "they're being pecked to death by ducks"--a reference to the many cash outlays GM is facing in an attempt to put its legacy problems behind it. In all, GM has agreed in recent weeks to write $1.7 billion in checks to escape those problems--$200 million to help settle a strike at American Axle, $650 million to support bankrupt Delphi $375 million as a potential backstop to GMAC's troubled Rescap mortgage subsidiary, and $826 million to repurchase its headquarters.

GM predicts an uptick in the economy in the latter half of the year. But with sales of high-profit trucks and SUVs tanking, Lehman Brothers analyst Brian Johnson expects GM to burn through $7 billion cash this year--potentially more, if steel companies hit the automaker with additional surcharges, as some expect. That would leave GM with $17 billion in cash at year-end, Johnson estimates.

That would put GM's liquidity in danger. To weather a downturn, GM Chief Financial Officer Raymond Young says the company needs at least $18 billion-$20 billion in cash, plus access to another $4 billion-$5 billion in credit lines.

With continued losses in North America, Lehman Brothers expects GM to burn about $10.3 billion in automotive operations between now and 2010, including $8.4 billion in cash and $1.9 billion in restructuring costs. Without refinancing its debt or drawing down the $7.3 billion credit line, GM would be down to $7.9 billion in cash by 2010, Lehman says.

Full Article: http://www.forbes.com/business/2008/06/30/gm-debt-credit-biz-manufacturing-cz_jm_0602gm.html

 

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Nervious? Me? YES!!!


WOOT!!! First to respond XD

Courious, How is Barron's story correct if GM is in this kinda trouble?
 

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Can somebody please post something positive? Even if it's just a big lie, I'll still read it and smile. I just need some positive news, even a sliver of positive news.

How about this ... "Plenty of Parking Available at GM Dealerships"
 

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Can somebody please post something positive? Even if it's just a big lie, I'll still read it and smile. I just need some positive news, even a sliver of positive news.

My kid went outside and rode his bicycle into the side of my 2006 black Saturn Vue. Wow, the plastic doors are fantastic. NOT ONE DENT Plus a great learning experience!
 

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Discussion Starter · #5 ·
Can somebody please post something positive?
Cat Rescued After Six Days In Tree



Man Volunteers To Climb Tree To Save Cat

UPDATED: 12:36 am EDT June 1, 2008

MANCHESTER, N.H. -- They can put a man on the moon but try to get a cat down from a tree and it does seem like rocket science.
Carol Fichel's 10-year-old cat, Emmie, was stuck in a tree off of Brown Ave. in Manchester for six days.

Carol Fichel put blankets under the tree to encourage Emmie to jump she tried everything from tuna fish to sardines.

After days of hearing the cat cry outside her window News 9 covered Carol's story and a viewer spotted the newscast.

The viewer's brother was Tom Goonan of Manchester, a professional tree climber. Goonan volunteered to climb up up the tree with his gear.

In seconds Goonan was talking to Emmie, scooped her up into his sweatshirt and brought the cat down at least forty feet.

Emmie is now healthy, back in her grateful owner's home.
http://www.wmur.com/news/16448130/detail.html
 

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Can somebody please post something positive? quote]

Cat Rescued After Six Days In Tree



Man Volunteers To Climb Tree To Save Cat


POSTED: 11:49 pm EDT May 31, 2008
UPDATED: 12:36 am EDT June 1, 2008



MANCHESTER, N.H. -- They can put a man on the moon but try to get a cat down from a tree and it does seem like rocket science.
Carol Fichel's 10-year-old cat, Emmie, was stuck in a tree off of Brown Ave. in Manchester for six days.
Carol Fichel put blankets under the tree to encourage Emmie to jump she tried everything from tuna fish to sardines.
After days of hearing the cat cry outside her window News 9 covered Carol's story and a viewer spotted the newscast.
The viewer's brother was Tom Goonan of Manchester, a professional tree climber. Goonan volunteered to climb up up the tree with his gear.
In seconds Goonan was talking to Emmie, scooped her up into his sweatshirt and brought the cat down at least forty feet.
Emmie is now healthy, back in her grateful owner's home.
http://www.wmur.com/news/16448130/detail.html
Awesome story ... I'm teary-eyed. Now I'm convinced that GMI needs a 'positive news' forum for those of us that overdose on the negative news.

Now, where did I put those meds...
 

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The article points out that GM has assets to leverage. They should be able to get the money they need.
 

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Can somebody please post something positive? Even if it's just a big lie, I'll still read it and smile. I just need some positive news, even a sliver of positive news.

How about this ... "Plenty of Parking Available at GM Dealerships"
The Chevy Volt will be on sale July 4th, 2008 with a base price of $18,000.00!! :D
 

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I hear GM is going to redesign the Camaro again because of it's already aging looks on the ...........on the forums........that's positive news
That's because GM's so desperate to keep its image remotely positive, it unveils products 2-3 years before anybody can actually buy it.

I thought I was the only one who thought the Camaro would be "old news" by the time it hits showroom floors. I give the Camaro three, maybe four years on the market before sales drop like a rock. Everybody who wants one will buy one the first year it's out; those who can afford to that is. After the first year the only takers will be those who had to save up longer to buy one (since the credit crunch will likely make car buying a bit tougher from now on).
 

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The restructuring announcement coming tomorrow may make this article look pretty bad. I hope.
 

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Hey, I'm sorry to have to say it.

But something has gotta give. The current management team bet the farm on pickups and hydrogen cars - and they were dead wrong on both counts.

The competition (Toyota/Honda) put their eggs into the hybrid and small car basket, and they are sitting pretty. So if the pickup trucks aren't flying off the lot for Toyota...so what ??? They can't build Camry hybrids and Prius' fast enough to satisfy the American public.

I'm thinking 5 more years of Wagoner oughta be just about enough to put GM into Chapter 11...
 

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Can somebody please post something positive? Even if it's just a big lie, I'll still read it and smile. I just need some positive news, even a sliver of positive news.

How about this ... "Plenty of Parking Available at GM Dealerships"
Anytime I feel a particularly negative day has occurred for GM-and there are plenty-I know visiting a few websites always puts a smile on my face. Seriously, try not to look at that without feeling good about GM.
 

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The article points out that GM has assets to leverage. They should be able to get the money they need.
Thats half of what you need to float a bond issue... Bond holders are an odd bunch... Unlike stock holders, bond holders actually expect to get their money back someday. And in order to repay a loan you need the prospect of positive cashflow someday within the term of the bond...
 

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Anytime I feel a particularly negative day has occurred for GM-and there are plenty-I know visiting a few websites always puts a smile on my face. Seriously, try not to look at that without feeling good about GM.
I agree with you on that car - and the CTS sedan, Corvette, G8, Solstice, etc. The problem is, none of them are real volume cars. The only volume car homerun that GM has hit in a long time is the new Malibu. GM needs class leading compact and subcompact cars right now. Volume is the only way to make any real money on cars.
 
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