Shares of GM hit new low on bankruptcy worries
Jul. 11, 2008 12:00 AM
Associated Press
NEW YORK - Shares of General Motors Corp. slid to another record low Thursday as speculation swirled about the financial viability of U.S.-based automakers and a possible bankruptcy filing at GM.

GM shares fell 64 cents, or 6.2 percent, to close at $9.69, after tumbling to $9.32 earlier, passing Monday's five-decade low by 60 cents.

Thursday's low marked the Detroit-based automaker's lowest share price since July 2, 1954, when its stock dropped to $9.15, according to the Center for Research in Security Prices at the University of Chicago. The price is adjusted for splits and other changes.

Carl-Peter Forster, president of GM Europe, called rumors that the automaker is near bankruptcy "baseless" in an interview with Spiegel Online, the Web site of the German news magazine Der Spiegel.

But Forster acknowledged in the interview, released Thursday, that the automaker must restructure its U.S.-businesses in the next 18 months.

GM Chief Executive Rick Wagoner also dismissed the speculation, saying at a lunch meeting of Dallas business leaders that comments in the past week about a potential bankruptcy are "not at all constructive or accurate."

Forster also said that while GM is discussing the sale of its gas-guzzling Hummer brand, reports about other brands being up for sale are pure speculation.

Mark LaNeve, GM's vice president of North American sales, also denied reports that the automaker is looking into the possible sale of other brands in a memo to GM dealers this week.

GM's shares have taken a beating this year, as soaring gas prices drove U.S. consumers away from its sport-utility vehicles and pickup trucks in favor of more fuel-efficient cars and crossovers.

Since the beginning of the year, GM shares have fallen nearly 60 percent. In the past 12 months, GM shares have lost about 72 percent.

Shares of Ford Motor Co. also tumbled Thursday, falling 37 cents, or 7.5 percent, to close at $4.58, after dropping as low as $4.47 earlier. The Dearborn, Mich.-based company's shares dropped to a multi-decade low of $4.30 on July 3.

Citi's Itay Michaeli said that both GM and Ford, along with privately held Chrysler LLC, will need significant cash as they face one of the most severe downturns in their industry's history.
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