Important Update on GM Viability Plan,GM says it doesn't need $2B from gov't in March

[meanmike]

To: All US Dealers

Please see the attached statement and Associated Press article highlighting the fact that we have deferred the $2B government loan installment previously scheduled to be received in March. The fact that we do not need the money at this time is testimony that we are making steady progress on our plan despite very difficult economic and industry conditions.

With your help, we have dramatically reduced our structural cost, and more importantly have met or exceeded the targets in our submitted plan through February.

March looks like another challenging month. We have great incentives in place and it is important that we continue to compete for every sale. Good news about our progress can only help.

Thanks and keep selling.

Mark LaNeve
GM North America Vice President
Vehicle Sales, Service and Marketing



GM Leaders:

We have advised the U.S. Presidential Task Force on The Auto Industry that the $2 billion of funding previously requested for March would not be needed at this time. This development reflects the acceleration of GM's company-wide cost reduction efforts as well as pro-active deferrals of spending previously anticipated in January and February. Thanks to you and your teams for your tremendous focus on cost during this critical time.

We will remain in regular contact with the Task Force on the status of GM’s restructuring actions, our liquidity position, timing of future funding requests, and other relevant topics of mutual concern. We will continue to keep you informed as well.

Thanks for your continued support and leadership.


Ray G. Young
Executive Vice President and
Chief Financial Officer



GM says it doesn't need $2B from gov't in March
By TOM KRISHER, AP Auto Writer Tom Krisher, Ap Auto Writer – 36 mins ago

DETROIT – General Motors Corp. says its restructuring plan is starting to take hold, improving the automaker's fortunes at least to the point that it won't need a $2 billion government loan installment that it had requested for March.

Chief Financial Officer Ray Young said Thursday that GM formally told the Obama administration's autos task force on Wednesday that it wouldn't need the money this month. But in an interview with The Associated Press, Young would not say when the struggling automaker would need more government money or whether it will reduce the size of its loan request. "It seems like our companywide cost reduction efforts are moving well, as well as we've been able to defer spending that we previously anticipated in January and February," Young said. "I think that's a positive development."

GM, which is living on $13.4 billion in government loans, has requested another $16.6 billion as it tries to weather the worst auto sales slump in 27 years. Young said GM's cash burn rate, the amount of spending above revenue, has 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. Clearly we still have a cash burn," he said, attributing the burn rate to a lack of revenue from the company shutting down many of its factories for the month of January.

He would not say if GM will need another government loan draw in April. In its viability plan filed Feb. 17, GM asked for $2 billion in March and another $2.6 billion in April. It would not need any more money until 2011 when a $4.5 billion revolving line of credit comes due. The company also says it could need up to $7.5 billion more if the economy doesn't improve, for a total of $30 billion by 2011. It plans to start repaying the loans with $2 billion in September.

GM shares were up 15 cents, or 8 percent, to $2.01 in midday trading.