Debt analyst Douglas Karson in a note published late Monday said that weak North American auto operations, including falling SUV and truck sales, along with cash restructuring charges and payments due to former subsidiary Delphi Corp., could leave Detroit-based GM with just $10 billion in cash by year-end 2010, pressuring the automaker to raise new capital.
"Even though the bank loan market remains very tight, we think that GM has enough unencumbered collateral to successfully issue a secured term loan -- the bottleneck will be how much does the loan market want to buy, and at what price?" Karson wrote.
The automaker is also considering other options to raise cash, including retaining Citigroup Inc. to help it sell its gas-guzzling Hummer brand. Karson said GM needs to bridge the gap until 2010, when it is expected to see significant increases in earnings and operating cash flow as an agreement with its United Auto Workers union to transfer retiree healthcare costs to a trust kicks in. - Lou Whiteman
See Dealwatch: Autos
See Dealscape post on GM hiring Citi
General Motors Corp. could burn through nearly $14 billion in cash in the coming years and could be forced to raise additional capital, according to a Banc of America Securities LLC report.
