- The Washington Times - Tuesday, November 18, 2008

From combined dispatches

Cash-strapped General Motors Corp. said Monday that it will delay reimbursing its dealers for rebates and other sales incentives, an indication that the company is starting to have cash-flow problems.

GM also announced that it will sell its entire stake in Opel subsidiary $1.25 billion in loan guarantees.

GM spokesman John McDonald said dealer payments due Nov. 28 will be delayed for two weeks until Dec. 11, while those due Dec. 4 will be paid Dec. 18. The normal weekly schedule will resume after that. He would not say how much money the company will save from the delays.

GM said Nov. 7 that its cash situation was so dire that it may reach the minimum required to run the company by the end of the year.

Mich., said the delay is a sign that the company knows it will run low on cash, and dealers may be most able to take the hit without hurting the company.

“They must have weekly projections here that show them bumping on their minimums,” Mr. Conway said. “I think they’re scraping the bottom of the barrel here.”

The struggling company said Monday it will sell its entire stake in Suzuki Motor Corp. for $230 million, the automaker’s latest move to stay afloat while awaiting a decision on government aid for the industry.

Suzuki said it would buy back the 3 percent stake from the American auto giant, which is seeking a $25 billion government lifeline, together with Chrysler LLC, to weather the deepening economic crisis.

While the sale is another indicator of GM’s near-term liquidity challenges, the proceeds are not very meaningful, Joseph C. Amaturo said in a note to investors.

“GM is expected to burn $4 billion to $5 billion in [the fourth-quarter] or roughly $1.5 billion per month. Hence, the cash proceeds from the sale of its equity stake will not even cover one week of expected cash burn,” Mr. Amaturo said.

Suzuki said GM’s stake sale was necessary for the ailing American automaker to raise capital, but the Japanese company insisted that it would continue a business partnership with GM.

Meanwhile, Adam Opel GmbH that it was “not yet determined” whether the automaker would be given $1.25 billion in loan guarantees from the government.

Ms. Merkel said government officials planned further talks on the issue and should come to a decision by Christmas.

“We were unanimous that if such a bailout did take place, the funding would have to stay in Germany with Opel GmbH,” she said.


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