Bad Times as GM Nears Bankruptcy
With Ford under $2 per share and GM under $3 per share, the two companies are very close to bankruptcy. GM has asked the US Federal Government for money; can you imagine the US Government OWNING an automaker?
What's worse is some large credit insurers have canceled their coverage of Ford and GM debts. That means the chances of GM obtaining money through conventional financial loans are near zero. While GM has 16 billion dollars in cash left, it needs 11 billion to survive during the next four months. After that? Who the hell knows.
"In its filing late Friday with the Securities and Exchange Commission, GM said if its independent auditors conclude in their year-end review of the company's finances that there is "substantial doubt" about GM's "ability to continue as a going concern" in 2009, the company will be in violation of debt agreements, including a $4.5 billion secured revolving credit facility and a $1.5 billion loan.
That would give the lenders the right to call in the debt. GM said that among factors that could put it in such a state would be if it cannot find new sources of funding or receive substantial proceeds from asset sales."
What's worse is some large credit insurers have canceled their coverage of Ford and GM debts. That means the chances of GM obtaining money through conventional financial loans are near zero. While GM has 16 billion dollars in cash left, it needs 11 billion to survive during the next four months. After that? Who the hell knows.
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