GM needs to refinance $9 billion in debt over the next two years
05/14/2008, 11:17 AM
By Drew Johnson
General Motors — the U.S.’ largest automaker — will need to refinance about $9 billion in debt over the next two years, a new report finds. In addition, GM may have to seek additional cash as it continues to burn through its reserves due to the sagging market and rising commodity prices.
Between now and January 2010, GM will have to refinance $8.7 billion in debt and absorb a cash burn of $11 billion, Lehman Brothers analyst Brian Johnson told Automotive News.
Earlier this month, Fitch Ratings said that GM was in serious jeopardy of a ratings downgrade and predicted the auto giant would continue to lose money through 2009.
Over the past three years, GM has lost a combined $51 billion.
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05/14, 11:43 AM
posted by:
gizmo2
Wow!! They may need to down size some of their operations. Why are they burning through so much cash? It’s it going towards new development, Volt, 2Mode Hybrid, etc? Something not right with that operation.
05/14, 11:47 AM
posted by:
F451
I wish that the Big 2.5 US automotive manufacturers would get together and help each other out versus what they are doing now. Japanese corporations do this in needy times, why can’t our boys do it to save an ailing, outdated system? Gizmo2, it is pathetically easy (sad, but true) to have burn rate that will constitute a runaway wildfire in today’s business world.
05/14, 11:53 AM
posted by:
injunraiv
Or maybe get to the real source of the problem, oil company price gouging…
05/14, 11:55 AM
posted by:
Z06ified
That’s what the $30 billion in cash on-hand is for. Problem solved.
Do these analysts have any brains at all between their ears?
05/14, 12:03 PM
posted by:
400horseSS
^nope
05/14, 1:09 PM
posted by:
F451
You need your cash on hand for R&D, etc, in the hopes of producing what buyers will be looking for in the near future. Using it to pay down your debt service will simply lead to closing your doors for GM in the long run; refinancing is the smart way to go.
05/14, 1:59 PM
posted by:
hateful83
Remember how they bought those office buildings in Detroit? I’m sure that money comes from a different pot, but it still seems crazy when you read this.
05/14, 2:03 PM
posted by:
F451
Hateful83, it was a great move on GM’s part as facilities pay a large part in corporate business, and depending on the tax advantages at the time, can prove quite beneficial.
05/14, 2:42 PM
posted by:
xyunya
Maybe Kerkorian was right when he was pushing for union with Renault-Nissan? it is Monday night quarterbacking, but those news aren’t good at all. And Wagoner with Lutz were promising much brighter road ahead 2 years ago during disarrangement with Renault & Kerkorian’s cash.
05/14, 2:43 PM
posted by:
xyunya
I almost forgot to bitch about their 100% raises for this coming year.
05/14, 2:49 PM
posted by:
doublearon21
RIDICULOUS. Enough said
05/14, 3:41 PM
posted by:
moto-racer13
wow thats some serious debt. what the hell is wrong with the US auto industry? wheres that homo johnny canuck who loves to give us his opinions on whats going on with this industry? maybe he’s still eating his kraft dinner that his over weight wife made for him. Its just a matter of time untill he comes online to blast me for insulting his fragile ego. I am so certain that he will comment against me as I am sure the sun will rise tommorow. If he doesn’t comment against me, he’s just trying to prove me wrong, but I know I’m right.
05/14, 3:52 PM
posted by:
Thatguy
Um, pretty obvious. Fewer buyers are buying trucks, large utes, which is the only thing GM can make money on due to labor costs here in the states. There isnt a dime to be had on Cobalts and such by an american manuf, they are only offered for cafe and a few other reasons. US auto man are going to be hurting for years, not this two years turnaround lie our execs keep touting.
05/14, 4:30 PM
posted by:
Get Real
The paradigm of big SUVs and crappy cars hurts now.
05/14, 5:33 PM
posted by:
VictorRaikkonen
Regardless of a few design achievements, i.e. the new Caddys and the re-badged Holdens into Pontiac, the re-badged Opel into t/Saturn Sky, GM still makes ugly “a” cars. I do not care what anyone says about how great the new Malibu is it looks like crap, so does the G6 and a whole host of other cars. However, unlike Ford, at least they now understand that people want good looking vehicles. [5.53 am not pm]