CEO says bankruptcy 'probable,' not favored

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DETROIT --- General Motors Corp. CEO Fritz Henderson said Friday that a bankruptcy filing is "probable" because of the restructuring goals GM must meet to get more government loans, but that isn't the company's preferred option.

In a conference call with reporters, Mr. Henderson said GM is working on two parallel plans: one that involves bankruptcy and one that doesn't.

He also said GM will need more government aid in the second quarter, though the timing has yet to be decided. In its viability plan filed Feb. 17, the company said it would need $4.6 billion in the quarter, and that hasn't changed, he said.

"At this point, it would be premature to say that there has been an approval for further funding, at least from a GM perspective," Mr. Henderson said.

GM has already received $13.4 billion in government loans, and it must meet strict requirements to cut labor costs and debt by June 1.

Mr. Henderson said the company will be prepared to file for bankruptcy if it is unable to reach those goals out of court.

The decision to file for bankruptcy would be made with the Treasury Department and GM's board of directors, but the government is not pressuring GM to file, Mr. Henderson said.

If GM does file for bankruptcy, Mr. Henderson said, speed is important. GM would seek agreements with creditors and unions before filing, or go through a fast in-court process.

Mr. Henderson said GM has been focused on rebuilding its viability strategy, so it hasn't yet launched intensive discussions with its bondholders. Talks with the United Auto Workers, he said, are second in line to Chrysler LLC, which faces an April 30 deadline to restructure and forge an alliance with Italy's Fiat Group SpA.

Mr. Henderson emphasized that GM's restructuring plan calls for the automaker to keep four core brands -- Chevrolet, Cadillac, GMC and Buick. He noted that GMC and Buick are highly profitable for the company.

He said the company won't sell its ACDelco parts division, despite having potential buyers.

"It's a highly profitable business for us; it's creating good, strong cash flow," Mr. Henderson said.

He said the company's April sales were "OK," but he did not elaborate.

He said GM expects final bids from three potential Hummer buyers by next week, with a decision expected by the end of April.

CHRYSLER, FIAT DEAL TO BRING NEW BOARD

DETROIT --- If Chrysler LLC and Fiat Group SpA can work out an alliance in the next two weeks or so, Chrysler would be run by a new board appointed by the U.S. government and Fiat, Chrysler's top executive said in a message to employees.

Chief Executive Robert Nardelli, in an e-mail sent late Thursday, told Chrysler's 54,000 workers that the majority of directors will be independent and not employed by either Fiat or Chrysler.

The new board, he wrote, would pick a CEO "with Fiat's concurrence," casting doubt on his own future as head of the struggling automaker. The e-mail obtained by The Associated Press didn't say whether Mr. Nardelli plans to stay with the company should it join with Fiat.

Sergio Marchionne, the CEO of the Italian automaker, told reporters earlier this week that he could run Chrysler.

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WW1949
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WW1949 04/18/09 - 08:55 am
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They need to can the unions,

They need to can the unions, get back to a realistic pay scale for the managers, reduce their legacy cost, cut the amount they pay for health costs by raising the deductible and having the emp;oyee pay 50 %. They also need to bring the cars down to a realistic price and do away with all the back invoice rebates to the dealers.

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