GM taps into $3.5 billion of revolving credit - Sept 25, 2008

GM has said it needs to raise between $4 and $7 billion by selling assets and tapping into $3.5 billion in revolving credit to stay liquid through the end of 2009. GM is worried that tightening credit on Wall Street and in the U.S. would make tapping into this credit more difficult at a later time. GM also just completed a $322 billion debt to equity exchange this week.
GMAC LLC, the money-losing home and auto lender partly owned by GM, renewed a credit facility with Citigroup Inc. today giving the company access to $13.8 billion, down from $21.4 billion that was available last year. GM sold 51 percent of GMAC to Cerberus Capital Management LP in November 2006.
GM is actively shopping its French assembly plants and has announced publicly for the fourth time that its Hummer brand is up for sale. GM's Treasurer, Walter Borst has said GM hopes to generate a $2 to $4 billion cash infusion from the sale.
Analysts on Wall Street feel both assets would be a hard sell at those prices.
What is more likely, according to The Phantom, speaking on his scrambled bat phone from his office in the Ren Center in Detroit, is a partial sale of some smaller GM French supply facilities, and a partial sale of Hummer. With production of the H3 intertwined with the Colorado and Canyon in Shreveport, and the H2 intertwined with AM General in Indiana, a complete sale of Hummer production facilities is unlikely and would be a legal quagmire and labor union nightmare. Offers for the Hummer brand have been significantly below the true value of the brand and have been more "feelers" than true offers.
GM burned through $3.6 billion in the second quarter and said that at the end of June its supply of cash, marketable securities and other funds available fell to $21 billion from $23.9 billion at the end of the first quarter, and $23.6 billion a year earlier.
Many at GM, including The Phantom, feel a total sale of GMAC LLC would generate enough cash to carry GM through 2010 and the sale of Hummer would not materially affect the cash position of GM, but would be more of a public relations move.