GM Books $4.2b Net Loss in Q3; Bankrupt By December
The Wall Street Journal reports GM’s statement on its dismal Q3 results. The General’s general admits that “estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business.” So, essentially, unless GM gets a federal bailout by 12/31/08, the artist formerly known as the world’s largest automaker will be forced to file Chapter 11. And no wonder, given GM’s cash burn reported [with all the numbers] by Yahoo! Finance. “Cash, marketable securities, and readily-available assets of the Voluntary Employees’ Beneficiary Association (VEBA) trust totaled $16.2 billion on September 30, 2008, down from $21.0 billion on June 30, 2008… The change in liquidity reflects negative adjusted operating cash flow of $6.9 billion in the third quarter 2008.” The entire “money shot” quote after the jump.
“Even if GM implements the planned operating actions that are substantially within its control, GM’s estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business. Looking into the first two quarters of 2009, even with its planned actions, the company’s estimated liquidity will fall significantly short of that amount unless economic and automotive industry conditions significantly improve, it receives substantial proceeds from asset sales, takes more aggressive working capital initiatives, gains access to capital markets and other private sources of funding, receives government funding under one or more current or future programs, or some combination of the foregoing. The success of GM’s plans necessarily depends on other factors, including global economic conditions and the level of automotive sales, particularly in the United States and Western Europe.”
Tate on Nov 09, 2008
It was coming, but its sooner than expected. The US Gov should sell all the brands to large Private Equity Companies (similar to a Chrysler and Cerebus Capital) and provide tax holidays and provide support for new green field production factories (thus helping economy) and in the meantime the brands can share production facilities at the existing factories and keep selling the current cars. This will develop new dealerships and supply chains etc and help boost the economy. Its hard and might sound stupid currently but will make sense in the long term future. For example- Maybe the Pontiac brand will down the years become a specialist high performance name like the Porsche or lotus. While Saab may become a specialty in hybrid technology.
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