At a news conference Friday, GM executives said the term sheet for the loan package was signed at 8:56 a.m. Friday. CEO Rick Waggoner said company executives had provided extensive data to Treasury Department officials and others in the Bush administration.
"They provided their offer last night," he said. "We spent some time going back and forth on the issues." He resisted a reporter's suggestion that negotiations were difficult, saying, "I don't think it would be fair to say it was very contentious."
Meanwhile, CFO Fritz Henderson said the company is confident it can meet the schedule requirements of the funding plan, because, "What we need to do is to execute the strategy we laid out" in the restructuring plan GM submitted to Congress Dec. 2. "We have planned to be very aggressive," he said. GM's plan envisioned scaling back to four key brands, reducing manufacturing costs and slashing debt.
That plan also envisions $18 million in government assistance for GM - including loans of $12 billion and a $6 billion line of credit -- and assumes domestic vehicle sales of 12 million units in 2009. This now seems optimistic, given that many experts anticipate sales will drop to the 10 million to 11 million range, a level not seen in decades.
Credit analysts agreed Friday that $13.4 billion is unlikely to resolve GM's problems, particularly with the sales outlook so dismal.
"The loans are just a temporary bridge until March 31, when the automakers must show plans for long-term viability, including concessions from industry participants such as debtors and unions, or repay the loans," wrote Standard & Poor's analyst Efraim Levy, in a report. He rates GM a sell.