General Motors indicated that its financial situation is not as dire as earlier thought, with executive vice president and CFO Ray G. Young saying that the struggling auto maker “at this time” would not need the $2 billion in government money that GM previously requested for March.
The company cited the acceleration of company-wide cost reduction efforts as well as “pro-active deferrals” of spending previously anticipated in January and February. GM has “advised the Presidential Task Force on The Auto Industry that the $2 billion of funding previously requested for March would not be needed at this time,” it said in a statement that accompanied remarks about resolution of an agreement with the Canadian Auto Workers..
GM added that it will remain in regular contact with the task force on the status of its restructuring actions, its liquidity position, timing of future funding requests, and other relevant topics.
Further, CFO Young told the Associated Press that GM’s cash burn rate, the amount of spending above revenue, had slowed since the company submitted a viability plan to the government on Feb. 17. “The cash burn that we thought we were going to have in January and February is not as high,” he said.
The announcement about not needing the $2 billion is somewhat surprising, given that in its annual report filed last week the company carried the auditor opinion that GM had warned last week would be coming. “The corporation’s recurring losses from operations, stockholders’ deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern,” wrote Deloitte & Touche.
Other press reports have said that the company still needs the $2 billion, just not as quickly as anticipated. And earlier this month GM warned that its European operations could collapse within weeks without help from European governments.
GM received $13.4 billion in federal loans in December. The automotive task force will decide by March 31 whether to give GM additional loans, according to the AP.