General Motors is “highly confident” it can meet the financial viability test set forth in a government bailout package, CEO Rick Wagoner said on Friday.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
GM and Chrysler have been offered a $US13.4bn dollar rescue loan in return for reforms and proof of financial viability by 31 March.
“I’m highly confident we’ll be able to meet that test,” GM chief executive officer Rick Wagoner said during a press conference, adding: “We obviously have some big steps we have to take.”
Under the plan, GM would get $9.4bn in two tranches by mid-January and Chrysler up to $4bn on 29 December, officials told Agence France-Presse.
Among the “targets” established by the loan would be a two-thirds reduction in debt by exchanging debt for equity, more flexible work rules and cuts in wages to make the companies competitive with foreign manufacturers established on US soil, the report said.
“The loan will be automatically called by the government and will be repaid in full if certain conditions are not met” by 31 March, a senior administration official told the news agency.
“The most important one is that the firms must be viable.”
The official added that “this does not mean the firms has to be profitable” by March 31 but that “the firms have to be profitable soon.”
Wagoner reportedly said the terms of the deals were “in most cases consistent with the plan we reviewed with Congress.”
“I think what we need to do is show we can get that stuff done on the required time frame and then on the basis of that we will develop future projections for the company.”
