An alarming sales drop in fourth-quarter has exposed General Motors Corporation (GM.N) to the shortage of cash and made it reliant on the government for financial assistance. This situation puts lots of concerns from investors’ side especially about the survival of GM.
The analysts are of the view that now the assessment of GM’s shares depends on the critical talks about its reorganization with autos task force and creditors call by U.S. President Barack Obama to cut liability and get new funds.
Though this recession can’t be neglected, funding plan is the thing that mainly matters. This greatest slump which started in USA has been turned into global crises. From this, the analysts are expecting a negative change in the cash and earnings in the year 2009.
Up to $ 30 billion dollars are required in the aid from government to escape GM from bankruptcy. The credit analysts are hoping for the government’s grant to save the automaker from impoverishment.
On the other hand like its smaller rival Chrysler LLC, GM is under pressure to enclose compromising talks over the settlement of healthcare trust fund with United Auto Workers Union. It has been also trying to have a deal with its bondholders to slash the remaining bond debt. But the bondholders and debt holders have their own concerns and are demanding the deeper concessions too.
GM could be successful in the agreement with bondholders if the government were ready to propose a debt guarantee.