White House to announce auto aid package at 9AM EST
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White House to announce auto aid package at 9AM EST
http://abcnews.go.com/Politics/Busin...6494698&page=1
We'll see what happens. I'm rather curious about the bolded part of the above passage.
The White House has come to the rescue of General Motors and Chrysler by providing them with low-interest loans, ABC News has learned.
Under the plan, which could be announced as early as this morning, the auto giants will be able to stay afloat into the new year.
The White House has been talking to the Obama team on its strategy, and the incoming Democratic administration has expressed no objections to the plan.
The loans come with strings attached. The automakers will need to restructure, getting tough concessions from creditors, suppliers and the labor union. The key phrase from the White House will be "viability."
The White House did not want to do this and in ordinary times, the Bush administration might have let these companies go down. With the economy so bad, however, the White House decided it could not afford to let these companies collapse.
Under the plan, which could be announced as early as this morning, the auto giants will be able to stay afloat into the new year.
The White House has been talking to the Obama team on its strategy, and the incoming Democratic administration has expressed no objections to the plan.
The loans come with strings attached. The automakers will need to restructure, getting tough concessions from creditors, suppliers and the labor union. The key phrase from the White House will be "viability."
The White House did not want to do this and in ordinary times, the Bush administration might have let these companies go down. With the economy so bad, however, the White House decided it could not afford to let these companies collapse.
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Ford is the real one who is benefiting from this. They're moving twice the number of shares that GM is. Hell, Sirius with all of their financial problems is moving trading at the same pace as GM is.
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From: Sandy VJJville
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Those that saw the president's press conference heard him say that it's basically enough money to buy time for a proper bankruptcy filing.
If the companies involved do not have a "positive net present value" by March 31, the loans will be called in - this basically means that bankruptcy will happen if the balance sheets of GM and Chrysler are not put in order in the next four months.
Here's the mess that needs to be cleaned up:
http://finance.yahoo.com/q/bs?s=GM
And some key excerpts for those too lazy to click on the link:
PERIOD ENDING 30-Sep-08
Cash And Cash Equivalents 16,007,000
Net Receivables 9,461,000
Total Current Assets 57,420,000
Property Plant and Equipment 42,156,000
Total Assets 110,425,000
Accounts Payable 61,798,000
Short/Current Long Term Debt 7,208,000
Long Term Debt 37,947,000
Other Liabilities 62,466,000
Total Liabilities 170,364,000
Net Tangible Assets ($60,888,000)
That big negative bottom line needs to be fixed in four months, which is going to mean large haircuts for the bondholders (that's the folks accounted for in the "Long Term Debt"), banks ("Short/Current Long Term Debt"), suppliers ("Accounts Payable"), and current workers and retirees ("Other Liabilities").
BTW, this was the balance sheet as of late September. Since nearly three months have passed, the situation is likely worse by several billion dollars.
If the companies involved do not have a "positive net present value" by March 31, the loans will be called in - this basically means that bankruptcy will happen if the balance sheets of GM and Chrysler are not put in order in the next four months.
Here's the mess that needs to be cleaned up:
http://finance.yahoo.com/q/bs?s=GM
And some key excerpts for those too lazy to click on the link:
PERIOD ENDING 30-Sep-08
Cash And Cash Equivalents 16,007,000
Net Receivables 9,461,000
Total Current Assets 57,420,000
Property Plant and Equipment 42,156,000
Total Assets 110,425,000
Accounts Payable 61,798,000
Short/Current Long Term Debt 7,208,000
Long Term Debt 37,947,000
Other Liabilities 62,466,000
Total Liabilities 170,364,000
Net Tangible Assets ($60,888,000)
That big negative bottom line needs to be fixed in four months, which is going to mean large haircuts for the bondholders (that's the folks accounted for in the "Long Term Debt"), banks ("Short/Current Long Term Debt"), suppliers ("Accounts Payable"), and current workers and retirees ("Other Liabilities").
BTW, this was the balance sheet as of late September. Since nearly three months have passed, the situation is likely worse by several billion dollars.
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I guess it's either this or shell out a hell of a lot more to clean up the mess after the bankruptcy and liquidation.....though that might happen anyway.
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So who wants a Mustang?
Ford Motor Co. said Friday it would not need a short-term loan from the government, but lauded the Bush administration's decision to extend aid to its cash-strapped competitors and renewed a request for a nine billion dollar line of credit.
"We do not face a near-term liquidity issue, and we are not seeking short-term financial assistance from the government," Ford president and chief executive officer Alan Mulally said in a statement.
Ford said it hoped to restructure its business without government assistance but requested the nine billion dollar line of credit as a "critical backstop or safeguard against worsening conditions."
The US government announced earlier Friday it would provide ailing automakers with 13.4 billion dollars in short-term financing in support of their restructuring, setting strict conditions to prove their viability.
"All of us at Ford appreciate the prudent step the administration has taken to address the near-term liquidity issues of GM and Chrysler," Mulally said.
"The US auto industry is highly interdependent, and a failure of one of our competitors would have a ripple effect that could jeopardize millions of jobs and further damage the already weakened US economy."
Ford said that while it is working to aggressively reduce costs it will continue to invest heavily in product development, including approximately 14 billion dollars over the next seven years to improve the fuel economy of its vehicles.
Ford said the comprehensive restructuring plan it presented to Congress will allow it to return to profitability by 2011
"While we clearly still have much more work to do, I am more convinced than ever that we have the right plan that will create a viable Ford going forward and position us for profitable growth," Mulally said.
"We do not face a near-term liquidity issue, and we are not seeking short-term financial assistance from the government," Ford president and chief executive officer Alan Mulally said in a statement.
Ford said it hoped to restructure its business without government assistance but requested the nine billion dollar line of credit as a "critical backstop or safeguard against worsening conditions."
The US government announced earlier Friday it would provide ailing automakers with 13.4 billion dollars in short-term financing in support of their restructuring, setting strict conditions to prove their viability.
"All of us at Ford appreciate the prudent step the administration has taken to address the near-term liquidity issues of GM and Chrysler," Mulally said.
"The US auto industry is highly interdependent, and a failure of one of our competitors would have a ripple effect that could jeopardize millions of jobs and further damage the already weakened US economy."
Ford said that while it is working to aggressively reduce costs it will continue to invest heavily in product development, including approximately 14 billion dollars over the next seven years to improve the fuel economy of its vehicles.
Ford said the comprehensive restructuring plan it presented to Congress will allow it to return to profitability by 2011
"While we clearly still have much more work to do, I am more convinced than ever that we have the right plan that will create a viable Ford going forward and position us for profitable growth," Mulally said.
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Ford said that while it is working to aggressively reduce costs it will continue to invest heavily in product development, including approximately 14 billion dollars over the next seven years to improve the fuel economy of its vehicles.
The way I read the article is that Ford have simply failed to invest in product/technology in the past. They're just catching up in places to GM whom (IMO) have it all over Ford on the powertrain/technology front and have yet to give Lincoln a product range to rival Cadillac, let alone the imported luxury marques.
Anyway, profitability in 2011 seems a long way off. That means Ford are in the same boat as GM and Chrysler, just different timelines, that's all.
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