Auto giant in big trouble
General Motors released a report Thursday that said it will likely go bankrupt unless it gets more government funding and successfully restructures the company.
The company has already gotten $13.4 billion in U.S. government loans.
Stock market fluctuations
The dismal report was, of course, followed by a drop in the company’s stock. In fact, GM shares fell to a 75-year low after the news was released.
At their lowest point, shares were going for $1.27 Friday. That’s the lowest price for GM shares since 1933. By afternoon, shares were back up to $1.49.
A little more help
In addition to the $13.4 billion it has already gotten from the U.S. government, GM will seek up to $30 billion to keep the company afloat. But those won’t be easy loans to get.
The company is also seeking additional funding outside the country. It is seeking help from the German government through its Adam Opel AG subsidiary in Germany.
Stocks will continue to decline
Stock market analysts have said that even if the company doesn’t file for bankruptcy, its share prices will likely plummet near worthlessness.
The analysts say that all the bailout money the company is getting from the government will dilute the price of shares.
Meeting with the White House
GM’s stakeholders are holding meetings with members of the Obama administration’s auto task force to weigh options. Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers said the task force will meet at the White House today and discuss GM and Chrysler LLC’s restructuring plans.
GM Chief Financial Officer Ray Young has said that GM is trying to renegotiate its $28 billion in unsecured debt with bondholders.
I wouldn’t be giving them an unsecured loan, that’s just plain crazy.