Treasury lends $2 billion more to General Motors
WASHINGTON — Taxpayers invested another $2 billion in General Motors Corp. this week as the struggling auto giant continued efforts to restructure and avoid bankruptcy court.
The Treasury Department said Friday it lent the additional money to GM on Wednesday to provide working capital. The loan pushes the total amount of GM’s government aid to $15.4 billion after the company said it would need more money in the second quarter to stay afloat.
A government report revealed earlier this week that the Treasury was prepared to provide GM with up to $5 billion more in federal loans and Chrysler with up to $500 million more in bailout support as they race against deadlines to restructure.
GM has until June 1 to complete restructuring plans that satisfy the government’s auto task force.
In a restructuring plan filed with the government in February, GM said it would need $2 billion more in federal loans in March and another $2.6 billion in April. But last month Chief Financial Officer Ray Young said the company’s expense cuts helped to hold off the need for the March installment.
GM CEO Fritz Henderson said last week that the automaker would need $4.6 billion during the second quarter.
In addition to the $15.4 billion, the automaker’s financial arm, GMAC Financial Services, has received $5 billion in government aid, plus GM received a $1 billion loan to buy more equity in GMAC.
GM had requested a total of $30 billion, and it’s unclear just how much of that the government is willing to give.
The company said in a statement that it appreciates the Obama administration’s support “as we undertake the difficult but necessary actions to reinvent our company.”
In order to get more loans, the government’s auto task force is requiring GM and Chrysler to swap part of their large debt for equity, cut unprofitable models, reduce labor costs and complete other restructuring steps.
GM would not deny reports Friday that it is preparing to scrap its Pontiac brand. The company issued a statement saying that no announcement had been made.
“GM is continuing to review its restructuring plan to go further and faster and best ensure its future success,” the statement said.
GM, which is under pressure from the government to reduce its brands, has said it wants to focus on four core brands, Chevrolet, Buick, GMC and Cadillac. It has placed Saturn, Saab and Hummer up for sale and has said Pontiac could become a niche brand.
GM faces a June 1 deadline to complete the tasks or enter bankruptcy protection. Chrysler’s deadline is Thursday. If Chrysler can’t reach a deal with Fiat by then, it likely will be auctioned off in pieces because no more government funding would be made available.
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