New York – Shares of General Motors rebounded on Thursday, closing up 6.29 percent at $22.63, after chief executive officer Rick Wagoner denied the troubled company had plans to file for bankruptcy.
GM’s stock moved up after plunging more than 30 percent in the past month amid slumping sales and concerns by investors that the world’s largest car manufacturer could be headed for bankruptcy. On Wednesday, the stock closed at its lowest level since the crash of October 1987.
“Were going through a rough patch of road these days, and its attracting a lot of opinions about our company and its future,” Wagoner wrote to GM employees on the company’s internal website, quoted by the Financial Times.
While some commentary was “thoughtful,” other opinions were “just plain wrong,” Wagoner wrote.
“I’d like to just set the record straight here and now: there is absolutely no plan, strategy or intention for GM to file for bankruptcy,” the letter said.
Although he acknowledged current losses were “unsustainable,” Wagoner said that filing for bankruptcy “is not only unnecessary; it would be clearly contrary to the interests of our employees, our stock and bond holders, our dealers, and our suppliers and importantly, our customers.
“What we are doing is taking the necessary steps to get our business profitable,” the letter said.
GM’s auto parts subsidiary, Delphi, went into bankruptcy in October, fuelling fears that GM would be forced to absorb billions of dollars in pension and health care costs for Delphi’s union employees.
GM sales have plunged with consumers reluctant to buy its gas-guzzling sport-utility vehicles at a time of record high gas prices. In October, the company announced a net loss of $1.6 billion for the third quarter, compared to a profit of $440 million a year earlier.
Wagoner said GM had a solid balance sheet and would recover by making “significant changes.”
“Despite the recent large losses in our US business, GM has a robust balance sheet and strong liquidity with 19 billion in cash at the end of the third quarter,” Wagoner wrote.
He added that the firm also had more than $16 billion in a fund for retired employees health care.
Wagoner cited an accord on health care costs with the United Auto Workers union as a positive step that would improve the company’s financial position. – AFP