GM requests much more federal aid to keep afloat
Struggling U.S. auto giant General Motors (GM) Corp. on Tuesday asked the U.S. government for another 16.6 billion dollars in federal aid, which, if granted, will bring the total government bailout money for the company to 30 billion dollars, Xinhua reported.
In December, the U.S. Treasury Department approved a 13.4- billion-dollar loan for the cash-starved automaker, the last installment of which, or 4 billion dollars, was received by the company on Tuesday.
However, the company said that it needs another 4.6 billion dollars in March and April. It also has a 4.5-billion-dollar revolving line of credit that must be refinanced in 2011. If market conditions continue to worsen, it may also need an additional 7.5-billion-dollar revolving line of credit to keep afloat.
The Detroit-based carmaker raised the additional funding request in a plan submitted to the Treasury Department on Tuesday, which also includes its restructuring measures aimed at restoring its viability.
The company claimed that with the federal aid, it will be able to achieve profitability in two years and fully repay the loans by 2017, with repayment starting in 2012.
As part of its restructuring efforts, the company said in the plan that it would cut its global work force by 47,000, including 20,000 in the United States by the end of 2012. It has been engaged in hard negotiations with auto trade unions and other stakeholders over the past months, but so far has not yet achieved all the necessary concessions.
The Bush administration in December granted financial assistance to GM and Chrysler LLC, both among the so-called Detroit Big Three along with Ford Motor Co., on the condition that they would submit satisfactory restructuring plans by Feb. 17 and prove themselves to be commercially viable in the long run before the end of March.
The new administration under President Barack Obama will review the companies' plans, and could pull back the government loans if it finds the plans not good enough, forcing the companies into bankruptcy.