Although some sources familiar with the matter hinted that Chapter 11 has become inevitable for the American automaker, General Motors last week said it would need up to $4 billion in state funds before June 1, the deadline when it must decide whether to go bankrupt or continue restructuring.
"Today's loan draw is higher than the amount forecasted in the April 27, 2009 S-4 Filing for the Bond Exchange Offer and reflects updated timing of when certain expenses would be incurred. Total U.S. Treasury funding received by GM to date is $19.4 billion.
We appreciate President Obama's and his Administration's ongoing support of GM and the domestic U.S. auto industry as we undertake the difficult but necessary actions to reinvent our company. We will continue to work closely with members of the President's Auto Task Force throughout our restructuring and together we will continue to monitor our liquidity needs during this period," General Motors said in the statement issued yesterday.
Additionally, GM also announced that it has reached a tentative agreement with the United Auto Workers (UAW), a step "which was required to meet competitive costs benchmarks and the expectations of the U.S. and Federal governments."
"The financial impact of the terms of the agreement are not expected to be materially different from the viability plan estimates included in the documents for the exchange offers. Details of the definitive terms of the tentative agreement are not expected to be publicly disclosed by GM until after member ratification is complete," GM said in a note.