Posted on 03/05/2009 5:11:58 AM PST by DeaconBenjamin
DETROIT — General Motors Corp.'s auditors have raised “substantial doubt” about the troubled auto maker's ability to continue operations.
The company revealed the concerns, raised by the accounting firm Deloitte & Touche LLP, in its annual report filed on Thursday.
GM has received $13.4-billion (U.S.) in federal loans as it tries to survive the worst auto sales climate in 27 years. It is seeking a total of $30-billion from the government. During the past three years it has piled up $82-billion in losses, including $30.9-billion in 2008.
GM says in its report that its auditors cited recurring losses from operations, stockholders' deficit and an inability to generate enough cash to meet its obligations in raising substantial doubts about its ability to continue as a going concern.
The company said in its filing that its future depends on successfully executing the viability plan submitted to the government in February to justify the loans.
“If we fail to do so for any reason, we would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. Bankruptcy Code,” GM said in the annual report, filed with the U.S. Securities and Exchange Commission.
But the company said in its filing that it has received waivers of the clauses for its $4.5-billion secured revolving credit facility, a $1.5-billion U.S. term loan and a $125-million secured credit facility.
“Consequently, we are not in default of our covenants,” the report said. “If we conclude that there is substantial doubt about our ability to continue as a going concern for the year ending Dec. 31, 2009, we will have to seek similar amendments or waivers at that time.”
(Excerpt) Read more at business.theglobeandmail.com ...
Couple of things:
1) GM is one of hundreds of companies asking for and receiving waivers on their debt covenants. From someone at B of A yesterday, “the epidemic is here”. But this is a minor issue.
2) The major issue is that their crushing burden of retiree health and pension benefits will ensure that the company cannot maintain competitiveness and will not survive financially if nothing changes. GM needs to bite the bullet, file Chapter 11 and restructure the retiree heath and pension systems if not turn them over to the Pension Benefit Guarantee Corporation. They cannot survive in their current structure.
But but but they are Too Big to Fail and so many suppliers and Union Workers are dependent upon them.
They deserve a never ending subsidy.
Where are Batman and Robin?
>The major issue is that their crushing burden of retiree health and pension benefits will ensure that the company cannot... They cannot survive in their current structure.
but this is news how?
Many of us have been saying that since 1976.
As long as the magic man Hussein is willing to take money from you and give it to them, why should they do anything different?
Those “retirees” are their left liberal voters.
Agree. GM should have filed for Chapter 11 from the get go. But, the UAW would not budge on renegotiating. So, now, here we are, full circle. Hopefully, GM will not receive any more money from the gov and thereby will be forced into Chapter 11 and the UAW will thereby be forced to make some significant concessions....
We need blue and white collar workers all over the country to bail out the high paid union agitators at GM! meanwhile Libs all over the country drive non-union Honda and Lexus.
I don’t disagree with any of what you said. Someone needs to stand up and say “No” to bailing any of the Big 3 out. They need to rework their deals with the UAW. Otherwise it’s just more money down the hole...
You are correct. This was known since they first went begging to Washington for bailout money. The deadline is approaching when GM will have to submit their plan for financial viability to the grand poobahs in DC. I guess they're discovering there is no plan and there cannot be a plan.
Part of Obama's rush to create a national health care plan is in part to cushion the blow to the UAW when the restructuring occurs, IMO. That plan is hitting major roadblocks set up not only by the GOP but also by moderate Democrats (e.g. Max Baucus).
All those 50-some year old retirees with a full pension and health care benefits who are too young to qualify for Medicare are the main concern. The younger employees have time to plan for their future.
Volvos and Subarus
The steel industry did exactly this. pensions were picked up by the PPGC, for the most part. Payrolls were reduced but the companies (some with new names) continued to make steel.
No, they can't. I don't see how they can survive, period. Everyone seems to continually point out how bad things will be if GM goes bust. To the contrary, the need for the automobiles that GM produces, albeit at a lower number, will still be there. When GM goes bust it will be the opportunity of a lifetime for those still producing automobiles, or those who desire to break into the field. The secret to being successful in business is finding a niche and filling it. The way GM is going there is about to be one huge niche to be filled. Someone will step up to the plate and fill the void left by the collapse of GM and whoever that turns out to be will prosper immensely.....
Their GM built Bat-mobile won't start...
Title is kinda melodramatic, but the company itself has said this in applying for more bailout money from the federal government.
Everyone knows that GM will have to file Chapter 11 without the government’s (read: taxpayers) additional support.
At this point, GM is asking for roughly $500,000 for each job it intends to save. With a promise to pay the money back some day. Can I have the same deal? I own a small company. Can I borrow $500,000 per worker at very low interest rates, and promise to pay it back, say in ten years? And, if in the end, my company goes broke, then the government is just out the money. How’s that?
And what a tremendous opportunity that was missed when they did show up in Washington with their hands out. Instead of flying into DC on three different jets, and making themselves a huge target for ridicule, what they should have done is taken a lesson from Preston Tucker as it was portrayed in the movie about him. If GM and Chrysler had shown up with their newest of the new concept vehicles, the latest new hybrids and whatever they have in terms of electric vehicles, and surround the Capital building the day they were testifying the advertising and PR boost would have been enormous. At that point, when I saw that huge opportunity they had missed for free advertising and PR, I decided in my own mind that neither would likely ever recover. Their shortsightedness was on display for all to see. Boy, did they ever blow it.....
Agree. It might do the US auto industry some good to prune the dead weight. that being said, GM would merely file Chapter 11 and restructure. I doubt they would simply disappear.
They never seem to miss an opportunity to miss an opportunity...
The 1960s TV Batmobile was the Lincoln, you reference.
Batman Forever used a Chevy 350 motor.
Batman Begins and The Dark Knight used a 5.0 liter Vauxhall/GM engine.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.