The US Government is said to be 'working around the clock' to resolve the troubles facing automaker General Motors after its auditors, Deloitte, this week warned about the company’s ability to continue as a going concern.
Deloitte stated that there was ‘substantial doubt’ about General Motors’ (GM)
ability to continue as a going concern in GM’s 10-K SEC filing on 4 March
concerning group’s annual results for 2008. However, Deloitte gave an
unqualified audit opinion.
GM has asked for more than $16.6bn (£11.8bn) from the US government. GM,
which reported a $31bn loss for 2008, is also seeking €3.3bn (£2.9bn) from
European governments.
‘The administration is very mindful of the challenges in the auto sector,’ a
US Treasury spokesman told the Daily Telegraph. ‘Our team is working around the
clock to develop the most thoughtful approach possible to the situation.’
Deloitte said that ongoing losses, stockholder deficits, and the struggle to
generate cash flow mean GM’s future is under serious threat. Despite this, the
group’s annual report and accounts published last month stated that creditors
had decided not to force the company to repay more than $6bn in loans, in order
to let GM press the case for more government financial aid.
GM also reiterated that it faces Chapter 11 bankruptcy and liquidation if
wide-ranging restructuring plans – which would see 47,000 job cuts – do not
receive financial backing. It is rumoured that GM, which owns the Vauxhall
brand, wants between £500m and £750m from the UK Government in return for a
stake in the company. GM Europe is expected to present its British proposals
next week.
There was a 21.9% fall in new car registrations in February compared with the
same month last year, according to figures released by the Society of Motor
Manufacturers and Traders on 5 March. New registrations for January and February
are down 28.2% on the same period in 2008.