General Motors has asked Congress for term loans of up to $12bn to provide adequate liquidity levels through to 31 December 31, 2009 and has requested an “initial draw” of $4bn this month.
Its submission late on Tuesday to the Senate Banking committee – ahead of congressional hearings in Washington later this week – also requested a $6bn line of credit “to provide liquidity should a severe market downturn persist”.
The automaker said it planned to start repaying the loans as soon as 2011 and the $6m credit line, if drawn by 2012.
GM’s said it plans increased production of fuel-efficient vehicles and energy-saving technologies; rationalisation of brands, models and retail outlets; reduced wage and benefit costs, including further reductions in executive compensation; significant capital structure restructuring and further consolidation of its manufacturing operations.
Any draws would be conditional on achieving specific restructuring requirements in the plan. To help speed the process and protect US taxpayers, GM is also seeking the creation of a federal oversight board to oversee the loans and restructuring plan.
“Federal assistance would enable GM to weather a credit crisis that has driven US industry sales to their lowest per-capita level in half a century, and help the company emerge fully competitive with all manufacturers operating in the US,” the submission said.
GM said it would invest about $2.9bn in alternative fuels and advanced propulsion technologies, with fuel economy improvements ranging from 12% to 120%, compared with conventional petrol engines during the 2009-12 period of the plan.
“As a result, we expect GM to become a significant creator of green jobs in the United States, as well as helping suppliers and dealers transform the US economy,” it said.
US product development and marketing efforts would focus on four core brands – Chevrolet, Cadillac, Buick and GMC. Pontiac would become a specialty brand with reduced product offerings within the Buick-Pontiac-GMC channel. Hummer has recently been put under strategic review, which includes the possible sale of the brand, and GM would immediately undertake a global strategic review of the Saab brand.
“As part of the plan, the company also will accelerate discussions with the Saturn retailers, consistent with their unique relationship, to explore alternatives for the Saturn brand,” GM said.
President Fritz Henderson told a media briefing in the US that the automaker would reduce its US dealer count from 6,450 to around 4,700 while about one-third of the models would be pruned from its vehicle range.
GM’s submission said chairman and CEO Rick Wagoner would reduce his salary to $1 per year [this is in line with similar commitments from Ford and Chrysler chiefs] and the plan also requires further changes in existing labour agreements, including job security provisions, paid time-off, and post-retirement health-care obligations. The common stock dividend will remain suspended during the life of the loans.
GM said the restructuring plan would enable it to operate profitably at industry volumes between 12.5m and 13m vehicles, substantially below the 17m averaged over the last nine years.
The company said it supported the formation of a federal oversight board as this “would help facilitate restructuring negotiations with a range of stakeholders”.