General Motors warns of 'substantial doubt' over its future

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The Independent Online

General Motors, the hobbled car manufacturer, reminded the world yesterday that it is still unable to say with certainty that it will be able to avoid bankruptcy protection, declaring in an annual filing with the US government that there remained "substantial doubt" about its viability going forward.

Auditors for the company, which has lost $82bn (£58bn) in three years, said that its survival depended on it successfully procuring new loans not just from the US government but also from the governments of foreign countries where it has operations, including Britain, Germany, Canada, Sweden and Thailand. It has already secured loans of $13.4bn from Washington.

Its survival, the filing said, also depends on it being able to meet an end of March deadline for renegotiated terms with its major debtholders, as well as with the unions representing its workers. It is also under pressure to demonstrate to the US government that a radical restructuring plan can realistically be executed.

"Our recurring losses from operations, stockholders' deficit and inability to generate sufficient cash flow to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern," the company said in the filing.

Analysts cautioned that the filing does not mean a bankruptcy protection is imminent, but it is reflective of the dire situation at GM amid a still-worsening economy and with no signs that car sales are about to pick up.

Securing the additional loans remains crucial, the auditors said. "If we fail to do so for any reason, we would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the US Bankruptcy Code."

And they emphasise the need to win assistance from those foreign countries where GM has manufacturing capacity, for instance with its Saab, Vauxhall and Opel badges.

"We believe that obtaining funding from these governmental sources will be necessary to continue to operate our business in its current scope," GM said. A failure to secure funds from any of these governments may require the car maker to "shrink or terminate operations or seek reorganisation" for subsidiaries outside the US.