General Motors Chief Executive Officer Rick Wagoner was in Washington as President Barack Obama's task force met ahead of a March 30 announcement on whether it will continue a GM and Chrysler bailout.
The president's auto panel is narrowing in on ``the decisions that have to be made'' regarding how to keep automakers, particularly GM and Chrysler, moving ahead, press secretary Robert Gibbs said in a White House press briefing. He didn't provide details. GM and Chrysler are surviving on $US17.4 billion ($25.2 billion) in US loans.
``Viability is largely going to depend on a restructuring that allows them to compete in a very changed global economic environment and to do so without continued government assistance,'' Gibbs said.
Wagoner was seen by a reporter as the CEO was leaving the US Treasury building, base for Obama's auto task force, which must decide whether to grant as much as $US16.6 billion in new loans the company says it needs to survive. GM spokesman Greg Martin wouldn't confirm whether Wagoner met with Treasury officials.
``The president's auto task force is meeting today,'' Gibbs said. ``I think they are winding down the decisions that have to be made and putting in place a plan that the president will announce on Monday.''
GM gained for a second day in New York trading after saying yesterday that 7,500 United Auto Workers members took buyouts, which Barclays Capital estimates may save about $US950 million annually. Obama suggested yesterday he is open to providing GM and Chrysler with more aid.
The shares rose 21 cents, or 6.2%, to $US3.62 in New York Stock Exchange trading.
``Today's rally in GM shares is unwarranted,'' Standard & Poor's equity analyst Efraim Levy in New York wrote in a note. The buyouts and Obama's comments don't ``move the recovery needle'' for the company, wrote Levy, who rates GM as ``sell.''
Wagoner, 56, has been in Washington several times since he unsuccessfully lobbied Congress for money in November and December. Then-President George W. Bush agreed to use bank- rescue funds on Dec. 19 with conditions that Wagoner push through cost-cutting labor and debt revisions.
Obama indicated yesterday he will outline his plans on a rescue for Detroit-based GM and Chrysler early next week.
``We need to preserve a US auto industry,'' the president said as he answered questions online from the White House. The ``current economic model of the US auto industry is unsustainable,'' he said.
The administration's auto task force probably will make more money available to carmakers, US Senator Debbie Stabenow, a Michigan Democrat, told reporters yesterday. Conditions are likely to include ``downsizing'' and continued restructuring, she said.
Obama's comments are bolstering the view that the automakers will be saved, Representative Thaddeus McCotter, a Michigan Republican, said in an interview yesterday.
``What we're focused on are the remarks by the industry and by the president, and there's been no indication that they're thinking that either Chrysler or GM is not viable in the future,'' he said.
GM's shares have rallied 63% since March 12, when Chief Financial Officer Ray Young said it wouldn't need a $US2 billion payment by the end of this month to survive as originally forecast. The biggest US automaker is benefiting from increased cost cutting, Young said.
GM has said it will shed 47,000 jobs globally in 2009 and plans to close five assembly plants, slash US brands to four from eight and eliminate thousands of dealers to end losses that have totaled $US82 billion since 2004, when it last posted an annual profit. The stock tumbled 87% last year.
Terms of GM's federal loans require reaching agreements to trim obligations to bondholders and the UAW by $US28.5 billion by next week.
Bondholders are being asked to swap debt valued at $US27.5 billion for $US9.2 billion in new debt and equity. GM also needs the UAW to agree to cut a cash contribution to a so-called Voluntary Employee Beneficiary Association union retiree health- care fund from $US20.4 billion to about $US10.2 billion in exchange for equity.
GM gave the bondholders a proposal March 24, a person familiar with the matter said.
GM offered the UAW $US10 billion in cash over 20 years and $US10 billion in preferred stock at 9% for the health-care fund, CNBC reported.
The automaker also proposed paying bondholders 8 cents in cash, 16 cents in new unsecured debt and 90% of the equity in GM, the news organization said, citing sources familiar with the details. The offers are preliminary and may change, CNBC reported.
GM has no agreement with the union or the bondholders, spokeswoman Renee Rashid-Merem told Bloomberg News in an interview. She wouldn't comment on details of the ongoing negotiations.
The stock rally ``could reduce the necessary level of dilution of GM shares in the event that it negotiates equity in exchange for bonds and health-care VEBA obligations,'' S&P's Levy wrote. ``Still, we see risks of dilution or bankruptcy reducing the value of GM shares.''