GM finds it a struggle to shift assets

By Greg Bensinger  |   2008-11-14  |     NEWSPAPER EDITION

GENERAL Motors Corp, seeking a United States federal bailout to stay in business, is having a harder time selling US$4 billion in assets after saying it may run out of cash, industry sources said.

Potential buyers are concerned that the units, including the Hummer sport-utility vehicle brand, would lose value should GM fail, Bloomberg News reported yesterday. The divisions being unloaded all would rely on Detroit-based GM as a partner after a sale.

"With the specter of bankruptcy looming over GM, there probably isn't a much more difficult environment in which GM could try to make these sales," said Pete Hastings, a fixed-income analyst with Morgan Keegan Inc in Memphis, Tennessee. "They may get someone to take these assets off their hands at a fire-sale price, but that's largely dependent on a bailout."

Shedding assets was a pillar of GM's plan to boost cash by as much as US$20 billion by the end of 2009. Available cash at the end of September fell 23 percent from the end of June, eroding the savings from job cuts and factory closures and helping spur GM to ask for US$25 billion in loans for the US industry.

GM hadn't found buyers for Hummer, the ACDelco replacement-parts unit or a French transmission factory before saying last Friday that it may not have enough operating cash to last through the end of the year without federal aid. "What this does is just layer a whole other level of uncertainty on a transaction," said Warren Feder, a partner at Carl Marks Advisory Group LLC.

GM spokesman, Tony Cervone, wouldn't name any suitors, say how much the auto maker expected to receive for the three units, or specify other assets being considered for sale to meet GM's liquidity goal. "We are approaching any discussions with the assumption that GM is going to be here for a long time," Cervone said.