GM may not need additional loans to survive: report

January 8th, 2009 - 5:05 am ICT by IANS  

Washington, Jan 8 (DPA) General Motors Corp has adequate funds from government loans to cover the worst-case scenario it described in December and won’t need additional help unless the economy deteriorates further, it was reported Wednesday.”The US Treasury’s $13.4-billion bridge loan … coupled with the separate transaction for GMAC, meets our liquidity needs under the scenarios outlined in our December plan to Congress,” GM spokesman Greg Martin told Bloomberg financial news agency.

The carmaker had earlier said it wouldn’t have enough funds to pay its bills in December and would go bankrupt without federal aid. The worst-case scenario it outlined for 2009 was car sales of 10.5 million vehicles.

GM has already received $4 billion of the $13.4-billion loan promised by President George W Bush to keep the iconic US car industry alive. It said the money was being used to pay bills, mainly to its 3,000 suppliers.

The bridge loan provides GM with $9.4 billion and Chrysler LLC with $4 billion over December and January. GM could get another $4 billion in February.

The Treasury Department also committed 6 billion dollars to supporting GMAC LLC, GM’s financing arm. It will buy a $5-billion stake in GMAC and also lend GM an additional $1 billion so that the largest US carmaker can contribute to the financier’s reorganization as a bank holding company.

GM owns 49 percent of GMAC, which is a critical source of financing for car sales.

The federal funds come with tough conditions. GM and Chrysler will have to prove they can return to viability or the money could be withdrawn by March 31, likely leaving no option other than bankruptcy.

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