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.”
01/07, 10:39 AM
posted by:
richt62167
Good for GM.!!! I hope They take the No.1 spot from Ford
01/07, 11:00 AM
posted by:
johnnycanuck
You mean Toyota…right?
01/07, 11:03 AM
posted by:
corvette
great… ford hasn’t been #1 for a long time.
01/07, 11:18 AM
posted by:
planet_drive
Ford is #3 in the US now and will soon slip to 4th because of Chrysler. Even though GM’s financial situation is still very bad compared to most other automakers, its still much better than Ford’s financial situation. Ford workers must now have the lowest worker morale in the auto industry and that always equates to even poorer quality products.
01/07, 11:34 AM
posted by:
SwerveEarly
Next year will be a true test. Toyota will be giving cars away in their quest to be number one, the economy looks shakey and as always everyone is planning increased sales. Especially Hyundai and VW, haha.
01/07, 11:40 AM
posted by:
Brendino
You think Ford will lose ground to Chrysler? They’re worse off than the Blue Oval.
01/07, 11:58 AM
posted by:
CA36GTP
Very good news, especially seeing as GM’s financial stability has been in question for years now.
01/07, 12:26 PM
posted by:
A4
Maybe now theyll lower my rediculous interest rate on my silverado.
01/07, 1:28 PM
posted by:
autonut
CA36GTP, nobody questioned GM financial stability (yet). The question everyone has is their ability to engineer car for the market within cost and time budget. Opel has solved that problem well and now GM is riding on Opel platform for large chunk of its cars. SUVs & CUVs are different story. GM still relies on Opel for smallish CUV/SUV as well (Saturn Vue).
I think GM went for line of credit before/during perceived threat from Renault/Nissan takeover. The larger debt, more difficult to mount hostile takeover. What kind of short sited financial management GM would have if they would need additional 4B just for 6 months? It was part of the “poison pill”.
01/07, 1:52 PM
posted by:
Commodore
Awesome. Everyone should be happy, haters included
01/07, 1:52 PM
posted by:
Z06ified
Actually, the market has questioned GM’s financial stability. Look at the discounts GM’s corporate bonds trade at. That’s OK, the markets questioning, and analyst’s ignorance = more money for me.
01/07, 2:59 PM
posted by:
CTS DRIVER
i dont think gm was worried about a takeover from nissan autonut, and its not like opel has just appeared out of nowhere, why should gm have 50 different global platforms? whay is everybody so hateful that gm is wisely using global resorces.
01/07, 3:08 PM
posted by:
Commodore
Deanster – exactly. Think Chrysler
01/07, 5:21 PM
posted by:
LP64O
Commodore, you’re awesome.
01/07, 5:28 PM
posted by:
autonut
By takeover from Nissan/Renault I meant insistence of Kirk Kerkorian to talk to Gnosn. During summer it looked like Gnosn make take Wagoner chair. It was nervous time for Rick and I am sure he did not want to look for a job. Shares actually went up, since Wall Street thought that merger would not hurt GM. As a matter of fact shares shot from $31 to $38 and back when talks failed (I remember because I played). Now they are at about $24.
01/07, 6:13 PM
posted by:
CTS DRIVER
yeah but i dont think nissan and gm have anything to benefit each other. and kerkorian may have made a huge mistake by bailing out on gm, as soon as he bailed gm made a lot of good moves, maybe it was his bad influence that caused so many problems.
01/07, 9:05 PM
posted by:
SS4LIFE
richt62167, GM globally took the top spot from Ford like over a half century ago. If you mean taking the top brand position well Chevy just recently took that top honor for 07 from the Ford brand. Toyota passed Ford, but this is old news that we all know.
Also financially GM has so many assets stuffed in their closets that out of the big three, GM would be the last to be in any fear from any bankruptcy.
But yeah it’s good to hear that they ended this $4B line of credit. Hopefully this reinstates some of the investors faith in GM.