General Motors’ (GM) CEO Rick Wagoner will reportedly announce a series of desperate cost-slashing and restructuring measures aimed at keeping the company solvent. This new initiative’s highlights include:
- asset sales and other measures to raise a total of $15 billion
- white-collar job cost cuts by 20% (especially for those who develop pickup trucks and SUVs), no bonuses
- additional plant closings (especially those that help make pickup trucks and SUVs)
- suspending dividend
- reduction in executive pay (Wagoner’s pay to zero?)
To raise more cash, GM also has several options (WSJ):
…the board has discussed issuing more equity and selling off the remaining 49% stake GM owns in GMAC LLC, these people said. GM could even consider separating its foreign subsidiaries into an isolated unit, and using that as collateral for additional financing or as a way to sell more equity
Issuing more equity? At 1950s stock prices? How encouraging.
Is GM in serious trouble and is there a real risk of bankruptcy? They’re fine…for six months:
GM had $24 billion as of March 31, but analysts expect that sum fell by as much as $5 billion in the second quarter alone. Mr. Wagoner has assured investors the company isn’t interested in bankruptcy protection, and said the company has enough liquidity to operate for the next six months.
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