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Old 10-29-2009, 03:54 PM   #1
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Default GM to Draw Down More U.S. Funds

General Motors Co. by the end of the week will outline plans to draw down more U.S. government money it will use to aid Delphi Automotive LLP and also give an update on a closely watched escrow account of its bailout funds, according to several people familiar with the matter.

GM's additional borrowing will mostly be limited to Delphi's funding needs and is expected to be north of $2.5 billion, based on prior announcements.

Delphi, formerly owned by GM, is a key GM supplier. As part of Delphi's exit from bankruptcy, GM is buying several of its plants and making payments to Delphi creditors.

The car maker by Friday plans to file a statement with the Securities and Exchange Commission disclosing its plan to use additional funds from the $30.1 billion in loans the Treasury Department committed to GM when it filed for bankruptcy protection in June. The $30.1 billion is part of the total $50 billion the U.S. allocated to help turn around GM.

Some of the $30.1 billion was used as so-called debtor-in-possession financing as part of GM's bankruptcy, but the bulk was put in an escrow account that GM could tap as needed.

It is unknown how much money remains in the escrow account, but GM estimated it contained about $20 billion around the time the company emerged from bankruptcy in J

GM officials have been reluctant to give updates on the balance of the escrow funds because it gives only a partial portrait of the company's cash situation. Still, the filing will represent a fresh, albeit incomplete, glimpse at GM's situation after the third quarter.

GM doesn't plan to update the public on its entire financial situation until the middle of November, when it will post an informal report for the third quarter, said people familiar with the matter.

GM's cash management has been under fire in the past 12 months following a liquidity crisis in late 2008 that led the company to seek a federal bailout. As U.S. auto sales fell over the past two years, GM's ability to cut costs was outpaced by a massive decline in revenue, leading to billions of dollars in monthly cash outflows.

By filing for bankruptcy protection and implementing a restructuring, GM has been working to cut costs to the point where its break-even point is dramatically lower than it was at the beginning of 2009.

Separately Wednesday, GM's top sales executive said the company expects to report its sales rose in October, its first year-over-year monthly sales increase since January 2008.

The auto maker, which is due to report the results Tuesday, said it boosted its U.S. market share for the third straight month in October. But the gains came at a cost, since GM used heavy discounting to clear inventories still flush with 2009 model-year vehicles.

GM on average spent $3,900 to $4,000 per vehicle on sales incentives—among the highest in the industry, said Susan Docherty, who recently took over as GM's top sales executive. The company will continue to use aggressive incentives to clear old models, but will work to better manage deals to improve profitability and bolster resale values of its vehicles, she said.

"I'm not going to tell you incentives are going away," Ms. Docherty said in a meeting with reporters. "They're part of the game, but they can be better managed than they have been in the past."
The Wall Street Journal
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Old 10-29-2009, 05:01 PM   #2
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As far as I am concerned there should be a huge ticker on top of EVERY GM website that says.


Thanks again for your support.


WE ARE XXXXXXXXXX dollars from standing on our own two feet America, sorry we are filled with FAIL now.
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Old 10-29-2009, 05:08 PM   #3
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I agree, at the very least their financial standing should be completely transparent. None of this hiding the numbers until you can make them look good, crap.
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Old 10-30-2009, 01:11 PM   #4
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The more likely truth, which is worse, is that they do not actually know how much they have left.

Money is "fungible" as they say in banking....
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Old 10-30-2009, 01:18 PM   #5
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screw gm. let them go. That will give more room for nissan, honda, and toyota to expand.
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Old 10-30-2009, 01:21 PM   #6
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More likely it will be:

When this runs out you know we will
ask for more as there are no repercussions.
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Old 10-30-2009, 01:35 PM   #7
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why doesn't the gov't just take over the creditors? that way GM doesn't owe anything. after that, they should take over oil and steel so the gov't can make the cars and power them. i don't see a downside to leviathan...
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Old 10-31-2009, 10:09 PM   #8
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u shouldnt taunt them Hatred... they just might. what i love is that GM is doin the commercials saying theyre more fuel efficient then honda... by 1 mpg. id still buy a 1986 honda civic over any GM or Chrysler vehicle any day.

i too think that they shouldve been left alone to go out of business, but it kinda sucks for the workers (not saying that unions didnt have somethin to do with all this...) cause the CEO's have been making how much in bonus, while the companies havent made profits in what 10, 20, 30 yrs???
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