Speaking on a conference call with reporters this morning, General Motors CEO Fritz Henderson confirmed that a bankruptcy filing for the struggling Detroit automaker is a probable, but not preferred, outcome. GM is under a tight deadline to restructure by June 1 or else it will lose access to low-interest government loans.
“Our preference remains to accomplish this outside of bankruptcy,” Henderson told reporters during the conference call.
“I felt several weeks ago that it would be more probable that we would need to go through a bankruptcy process. I certainly feel that way; that continues today. I wouldn’t be able to hazard a guess as to what the probabilities would be.”
Henderson said that GM isn’t resting, however. The automaker is working hard on its restructuring plans, which it could make public as early as later this month.
“Contingency planning is under way,” he said. “We are on several tracks.”
GM hasn’t launched serious discussions with its unions since crosstown rival Chrysler LLC is under a far more strict deadline. Chrysler and its unions must reach an agreement with Fiat by the end of April or it will lose its access to the government loan program.
Henderson said that the automaker will begin ramping up negotiations in May with the UAW and CAW.
Focus on core brands
Henderson also addressed the rumor that GMC will be discontinued by stating that Buick and GMC are highly profitable for the automaker and thus unlikely to go away, despite slipping Buick sales in North America and the fact that GMC’s product portfolio is essentially redundant. Henderson did not comment on Pontiac’s future.
A decision on the Hummer brand is expected by the end of April, a month later than GM had previously led the media to believe. Henderson confirmed that there are three interested parties, though he did not give names or offer specifics.
Opel likewise has seen some significant interest from up to six outside parties seeking a stake in GM’s European brand. Henderson said GM will make an official announcement in two to three weeks.
GM will not sell its ACDelco division, one of the automaker’s most successful arms – and one which has been subject to much interest from potential buyers.
“It’s a highly profitable business for us, it’s creating good, strong cash flow,” Henderson said. “Our conclusion was that we weren’t going to get the value for the business. We’d rather keep it and grow it.”
In addition to accelerating job cuts to reduce spending, Henderson said that at least 2,000 dealerships will close in the near future.
