April 17 (Bloomberg) -- General Motors Corp., operating with $13.4 billion in U.S. loans, will probably still need $4.6 billion in additional U.S. aid this quarter, Chief Executive Officer Fritz Henderson said.
Henderson didn’t say when funding, needed for operations, would be required. The automaker in February asked for as much as $16.6 billion more in loans, including the $4.6 billion in this quarter. GM is still developing its restructuring plan with U.S. Treasury officials to try to avoid bankruptcy.
“It’s much like a private equity due-diligence process,” Henderson said today on a conference call. “We’re taking the watch apart step-by-step and rebuilding.”
GM will file for bankruptcy protection unless it can restructure out of court by June 1, Henderson said. The largest U.S. automaker is considering the financial implications of all its operations after the Obama administration said last month that GM’s initial plan to trim costs and keep government loans isn’t sufficient.
The Detroit-based company is talking with debt holders and unions to get deeper cuts, Henderson said. GM is developing a proposal to bondholders as fast as possible, “so think of this as April timing,” he said.
Keeping AC Delco
The automaker decided not to sell its AC Delco parts unit and has three bidders for its Hummer brand, Henderson said. GM said it has several parties interested in buying its Saturn and Saab brands and at least six entities weighing investing in its German Opel unit.
GM fell 8 cents, or 4.1 percent, to $1.86 at 4:02 p.m. in New York Stock Exchange composite trading. The shares have lost 91 percent of their value in the past 12 months.
Henderson’s call will help GM counter speculation about its survival efforts, said Joseph Phillippi, president of AutoTrends Consulting Inc. in Short Hills, New Jersey.
“You’re not going to be able to squelch rumors,” Phillippi said. “But obviously there’s thousands and thousands of questions and they’re getting some of them answered.”
To avoid court protection, Henderson needs agreements from unions and debt holders for savings beyond GM’s Feb. 17 proposal for slashing $47 billion in unsecured claims by 59 percent.
GM plans to make a formal offer to bondholders by April 27 to exchange their $27.5 billion in claims for equity, according to a person with knowledge of the discussions. President Barack Obama’s automotive task force told GM to try to restructure its debt out of court, people familiar with the matter said.
GM must slash United Auto Workers health-fund obligations to less than $10.2 billion from $20.4 billion and bond debt to less than $9.2 billion from $27.5 billion, amounts proposed in the now-rejected plan, or face a government-backed bankruptcy. The issues will probably be resolved along similar timelines, Henderson said.
“We have continued dialogue with the UAW on a whole host of issues,” he said, adding that the union’s need to secure an agreement with Chrysler LLC is slowing GM talks. “While our dialogue is open, I would expect we’d be able to pick up the pace here in the next couple of weeks.”
GM’s brand shuffling, which envisions the survival of at least Chevrolet, Buick and Cadillac, is part of talks with Obama’s task force on how best to use the divisions and dealerships, people familiar with the matter have said. GM needs to cut its 6,200 dealerships to about 4,100.
Besides Pontiac, GMC has been added to the discussions of brands that might be cut, people have said. No decisions have been made. GM said on Feb. 17 that it planned to focus on Chevrolet, Cadillac, Buick and GMC, with Pontiac as a niche entry. Henderson said both GMC and Buick are profitable.
“We developed a plan with four core brands,” he said. “What we’re making sure is every entry within those brands and every brand within those channels has a purpose for being and generates a suitable rent on those channels and generates a suitable return.”
Henderson said GM expects to draw on C$3 billion ($2.5 billion) offered by Canadian federal and provincial governments “sometime in the next several weeks.”
He reiterated that the company, which had planned to slash 47,000 jobs globally this year, will need to trim additional positions to meet the Obama panel’s more stringent requirements.
“There will be further reductions in manpower and people, both in the hourly and salaried side of the business,” he said. “This is something we expect to get accomplished by no later than June 1.”