General Motors has scrapped a $4 billion line of credit it secured in June 2007, saying it no longer needs the monetary safety net going forward — at least for the time being. GM has “sufficient liquidity and financial flexibility” to meet any expenses it might encounter in 2008, an SEC filing indicates.
GM never used the credit line, which was assembled by the GMAC financial division to ensure surprise costs wouldn’t harm the automaker’s recovery efforts. Given GM’s stabilizing financial situation, it would seem the company is becoming growingly confident, with sufficient cash reserves for a rainy day.
GM’s $30 billion cash stockpile should be enough for any “reasonable scenarios” that might arise, CEO Rick Wagoner told Bloomberg television. GM’s long-term debt stands at $34.7 billion.
However, Wagoner admitted 2008 might present new financial problems. He said a “more robust U.S. auto market is obviously a critical factor in us generating a lot of cash flow.” Unfortunately for 2008, He said it appears “we’re not going to see that.”
