Just posted to the New York Times website. Sorry if this ruins tomorrow morning’s paper for you. It probably won’t be such a good day for Rick Wagoner either, and he’s probably ruining lots of UAW members’ days too.
DETROIT—The chief executive of General Motors met with government overseers on Thursday to explain the carmaker’s financial situation, hours after G.M. reported a $9.6 billion south-quarter loss and said it was rapidly spending its cash reserves.
The G.M. chief, Rick Wagoner, is expected to ask for more assistance as he sits down with the auto industry task force created by President Obama. The panel, led by Treasury Secretary Timothy F. Geithner and Lawrence H. Summers, the White House economic adviser, will oversee the restructuring at G.M. and Chrysler.
Even as the meeting unfolds, G.M. finances were reaching a crucial point. The company said Thursday that its cash reserves were down to $14 billion at the end of 2008, including $4 billion it had borrowed from the government that month. G.M. spent $19.2 billion of its cash reserves in 2008. It spent $6.2 billion of the reserves—$2 billion a month—in the fourth quarter alone.
Since then, G.M. has borrowed $9.6 billion more, but the company expects to go through that money quickly, and says more aid is necessary to remain solvent.
“The economic situation is having a dramatic impact on our industry, on General Motors,” G.M.’s chief financial officer, Ray Young, said on a conference call Thursday. “We’re still forecasting a cash flow burn of $14 billion in ’09, so we will need some additional funding support.”
The company has said that it needed a minimum of $11 billion to $14 billion in reserves to finance operations, but the estimates were made before the recent drop in auto sales and cuts by G.M. in response.
G.M. lost $30.9 billion, or $53.32 a share, in 2008. For the fourth quarter, it lost $9.6 billion, or $15.71 a share, as its global sales fell 26 percent.
In 2007, the company lost $43.3 billion, a record, mostly the result of a noncash accounting charge; it adjusted the figure higher by $4.6 billion on Thursday.
The losses, though, are unlikely to shake investors, who have already realized the automaker’s perilous state. G.M. said last week that it might need as much as $30 billion to complete the restructuring plan that it has submitted to the Treasury Department.
Read the rest of the article.