GM says it's not considering bankruptcy

Ford's Mulally echoes GM's stance

UPDATED: 10/10/08 4:31 pm EDT DETROIT -- A day after its stock price fell to lows not seen since 1950, General Motors said on Friday it isn’t considering bankruptcy reorganization.

“Clearly we face unprecedented challenges related to uncertainty in the financial markets globally and weakening economic fundamentals in many key markets,” a GM statement says. “But bankruptcy protection is not an option GM is considering.”

“Bankruptcy would not be in the interests of our employees, stockholders, suppliers or customers, and we believe speculation about a possible filing is exaggerated and unconstructive.”

Also today, Ford Motor Co. CEO Alan Mulally ruled out a bankruptcy filing, saying the automaker was focused on its turnaround and managing its cash "very, very carefully" as a market slowdown spreads to Europe and Asia.

A bankruptcy filing "makes no sense to us," Mulally said in an interview with Reuters. "Clearly the most important thing for us is to continue to build our viable Ford."

Shares of GM stock closed Thursday at $4.76, a slide of $2.15 for the day. Standard & Poor’s put GM’s credit rating on watch Thursday, saying it could downgrade the company’s rating further into junk status. On Friday morning, Barclays Capital analyst Brian Johnson lowered his price target for GM stock to $4.

GM’s share price today swung to as low as $4 before jumping back up to $5.34. GM shares closed the day at $4.89, up 13 cents or 2.7 percent.

GM's statement was released after Standard & Poor's analyst Robert Schulz told Bloomberg Television this morning that the automaker may be forced to seek protection from creditors.

“Macro factors could overwhelm them at some point” even with the three biggest U.S. automakers committed to turnarounds, Schulz said in the interview.

S&P’s official statement yesterday said: "We believe GM currently has adequate liquidity for at least the rest of 2008 as measured by cash balances and available bank facilities, but the accelerating deterioration in industry fundamentals will be a serious challenge to liquidity during 2009."

Risk of being 'overwhelmed'

``Macro factors could overwhelm them at some point'' even with the three biggest U.S. automakers committed to turnarounds, Schulz said in the interview.

S&P said yesterday it would considering cutting the credit ratings of GM and Ford Motor Co. deeper into junk status.

"We believe GM currently has adequate liquidity for at least the rest of 2008 as measured by cash balances and available bank facilities, but the accelerating deterioration in industry fundamentals will be a serious challenge to liquidity during 2009," S&P said in yesterday's statement.

You can reach Amy Wilson at awilson@crain.com

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