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Cash Shortage at GM; Reports $2.5B 3Q Loss


gmotors.jpgGeneral Motors Corp., seeking federal aid to avoid collapse, said it may not have enough cash to keep operating this year and will fall “significantly short” of the amount needed by the end of June unless the auto market improves or it raises more capital.

The largest U.S. automaker reported a $4.2 billion third- quarter operating loss and said its available cash fell to $16.2 billion on Sept. 30 from $21 billion at the end of June. Merger talks with Chrysler LLC were suspended.

“GM is making a pretty direct plea for help,” said Pete Hastings, a fixed-income analyst at Morgan Keegan Inc. in Memphis, Tennessee. “The message is, ‘we’ve done all the things we can do, and we need help.’ And if we don’t get help, fill in the blank.”

The drain on cash reflected the strain of GM’s dwindling U.S. sales, which slumped 21 percent in the quarter as the credit freeze deepened. Chief Executive Officer Rick Wagoner and the CEOs of Ford Motor Co. and Chrysler met yesterday with U.S. House and Senate leaders as the automakers seek $50 billion in new government aid, a person familiar with the proposal said.

GM’s use of $6.9 billion in cash last quarter pushed its reserves closer to the $11 billion minimum that the automaker says it needs to pay its bills.

Today’s outlook was the bleakest yet from the automaker, which has lost almost $73 billion since the end of 2004. As recently as Oct. 24, GM had said bankruptcy “is not an option.”



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