GM seeks up to US$30b to avoid failure

Last updated 14:39 23/02/2009

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Carmaker General Motors, facing 47,000 job cuts worldwide, says it could need up to US$30 billion in US government aid or will run out of cash as soon as March.

The request for additional aid from the top US automaker came in a restructuring plan GM submitted to US officials on Tuesday.

The GM restructuring plan of more than 100 pages was posted on the US Treasury Web site.

The request came on the same afternoon that No 3 US automaker Chrysler requested an additional US$5 billion from the current US$4 billion in US government aid, saying it expected the brutal downturn in the US market to run another three years.

GM also said it had not reached deals with bondholders and its major union to reduce some US$47 billion in debt but would work to reach those agreements by the end of March.

In response to signs of a prolonged slump in demand for new cars and trucks, the automaker also said it would step up cost-cutting, reducing its global workforce by 47,000 jobs this year and cutting five additional US plants by 2012.

In addition, GM said it would cut its US workforce by another 20,000 jobs by 2012 with most of those reductions coming earlier.

GM has been kept afloat since the start of the year with US$13.4 billion in loans from the US Treasury. Its expanded aid request for up to US$30 billion includes a US$7.5 billion credit line in the event that the autos market remains depressed.

Critics of the bailout of GM and its smaller rival Chrysler LLC have urged the government to consider financing a court-supervised restructuring for the two ailing carmakers in bankruptcy.

GM said its own analysis of the costs and risks of a bankruptcy filing would require more than US$100 billion in financing that could have to be provided by the US government.

GM requested an unprecedented US government bailout in December and had pegged its funding need then at up to US$18 billion.

But the automaker has faced a deep slide in sales outside its long-slumping home market in the weeks since and GM said its revised restructuring plan would take aim at loss-making overseas units as well.

GM also said it would plan to phase out its Saturn brand by the end of 2011 and make a decision on whether to sell or just wind down its Hummer SUV brand by the end of the current quarter.

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- Reuters

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