SHARES IN US motoring giant General Motors (GM) slid to a 65-year low of just $3 a share yesterday as it battles bankruptcy rumours and a Deutsche Bank claim that the company is worth nothing.
A year ago, its shares traded at more than $33; now the Detroit giant is facing an uncertain future with deliveries down 21 per cent in the last quarter and down 45 per cent in October alone. GM, along with Ford and Chrysler, is asking Washington for a $50 billion (€39.7 billion) car-industry bailout to keep it from defaulting.
Company shares fell for a fifth day yesterday after a brutal verdict on its prospects by Deutsche Bank analyst Rod Lache. "Even if GM succeeds in averting bankruptcy, we believe that the company's future path is likely to be bankruptcy-like," he said in a research note, reducing GM's share price target from $4 to zero.
US president George W Bush has promised to study the request from the three car companies, but a spokeswoman said yesterday that borrowings under the US $700 billion bank-rescue plan had already gone "as far as they can".
GM chief executive Rick Wagoner told trade publication Automotive Newsthat GM needed an aid package before president-elect Barack Obama takes office in January. "This is an issue that needs to be addressed urgently," he said.
Credit analysts at JP Morgan said GM had several options to improve liquidity, but added that its short-term survival would require the help of the government, its suppliers, or both.
If government loans are not forthcoming to give the company time to rework its debt and worker obligations, the Deutsche Bank analysis forecasts a nationalisation by the government to allow restructuring, or a bankruptcy with government financial assistance to keep the company going through the process.
Earlier this week, GM said it might run out of operating cash by the end of the year.
A company spokeswoman has ruled out bankruptcy, saying it "causes more problems than it solves" and does not address the company's core liquidity problem.
GM is laying off staff and shutting production plants with accumulated losses of $73 billion since 2004 hampered by peak fuel prices and an effective freeze on credit plans used by customers to buy its cars.
