Thread: GM and Chrysler: 294 pages and the numbers are staggering

GM and Chrysler: 294 pages and the numbers are staggering

Wading through the 294 pages that General Motors and Chrysler submitted to the US Treasury, one thing stands out: the financial size of the problem the two companies face.

By James Quinn, Wall Street Correspondent
Last Updated: 6:26PM GMT 18 Feb 2009

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The numbers are staggering.Chrysler – which asked the US government for $7bn at the end of last year – wants an additional $9bn. GM estimates that under a worse-case scenario it will need $30bn, or $16.6bn on top of the $13.4bn of US taxpayers' money it has already gobbled up.

In December, a number of American friends, one from Detroit, took me to task over my suggestion that by the early New Year “the begging bowl will come out again.â€

GM plans almost 50,000 job cuts as it seeks $16.6bn

General Motors plans to axe costs by cutting almost 50,000 jobs in return for more billion-dollar loans from the US government.

By James Quinn, Wall Street Correspondent
Last Updated: 8:51AM GMT 18 Feb 2009

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The car company late on Tuesday asked the US government for an another $16.6bn (£11.7bn) in new loans and can keep the money if they can show the Government by the end of next month how it can become profitable. Rival Chrysler also asked for another $5bn and plans to cut 3,000 jobs of its own.

GM's plan to cut 47,000 jobs would amount to almost 20pc of the company's 244,500 staff globally and the company is in talks with Governments in the UK, Germany, Sweden and Thailand about receiving financial assistance.

The amounts the two companies requested are considerably higher than industry analysts expected, underlining the depth of the problems they face in restructuring their operations in the midst of a seismic shift in the global car market.

GM's request comes on top of $13.4bn in previously committed funds – including $2bn as early as next month and a further $2.6bn in April - while its smaller rival asked for $5bn on top of an existing loan of $4bn.

GM is fighting off the possibility of a bankruptcy filing, which it claimed yesterday would have a devastating impact on its already falling sales. "All research indicated bankruptcy would have a dramatic impact on GM sales," GM said in a 117-page reported submitted to the Government.

The report also detailed GM's plan to close an additional five US plants by 2012, complete a sale of its iconic Hummer brand by the end of March, and to close down its Saturn brand if a buyer cannot be found by 2011. The company's board, led by chairman Rick Wagoner, failed to reach a definitive agreement with either the United Auto Workers union or its bondholders prior to filing the report.

Chrysler meanwhile said it planned to cuts its outstanding debt by $5bn and reduce fixed costs by $700m in the current year. Chief executive Bob Nardelli said the estimated cost of a Chapter 11 bankruptcy protection filing would require $20-25bn debtor-in-possession financing from the US government.

http://www.telegraph.co.uk/finance/news ... 6.6bn.html