The Big 3 US automakers are finalising plans to be submitted to Washington lawmakers later this week that they hope will secure ‘bridging loan’ finances capable of getting them through a gaping liquidity hole next year.
The board of General Motors met on Sunday to review a restructuring plan intended to cut costs and win support for up to US$12bn in emergency funding from the US government, a person familiar with the deliberations told Reuters.
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Along with rivals Ford Motor Co and Chrysler LLC, GM is rushing to complete the business plans demanded by Congress as a condition of considering a US$25bn rescue package for the crisis-hit industry.
Privately held Chrysler, which is owned by Cerberus Capital Management, said on Sunday its board would also convene to review its revised turnaround plan ahead of Tuesday’s deadline for submission to lawmakers.
A report in the Wall Street Journal said that GM’s plan is expected to outline proposed solutions to fix its ailing North American operations and a restructuring of its balance sheet. Further, the report noted that liquidity problems were forcing the company to consider several options for its business, including an offer to some bondholders asking them to exchange debt for equity.
The company is also reportedly working to address issues such as executive perks and pay in addition to union compensation packages.
The automakers should tell Congress they will limit corporate pay, bonuses and severance packages in return for government loans, the president of the United Auto Workers union said on Sunday.
On CNN’s “Late Edition,” UAW President Ron Gettelfinger said carmakers only need a loan to tide them over a tough period and insisted high union wages were not the key cause of waning sales.
“They need to establish that executive compensation is something that they’re willing to curtail, as well as bonuses and ‘golden parachutes’ on exiting the business,” Gettelfinger said.
“They can also give the government an equity stake in the business.”
The Big 3 have been set a December 2 deadline by House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid for the submission of ‘path to viability’ plans. Congress hearings to debate the plans are scheduled for later this week.
