Efraim Levy, auto industry analyst for S&P, said in a note to shareholders today that it's "increasingly likely" that GM will file for bankruptcy protection.
In fact, GM President and CEO Fritz Henderson also said as much today, repeating more or less what he said back on April 17, that GM is unlikely to persuade 90 percent of its creditors to accept an offer that would avoid bankruptcy. The U.S. Treasury imposed the 90-percent threshold to define a successful deal with GM's creditors.
Henderson said that's probably unachievable. "I would say certainly that given the objectives we set for ourselves, more probably we would need to achieve our goals through bankruptcy," he said. Last month, when Henderson said something similar, it sounded more like a bargaining tatic. With just over two weeks to go before a Treasury deadlne of June 1, it sounds more like Henderson's considered opinion.
Levy of Standard & Poor's had reiterated a "Sell" opinion on GM as recently as May 5. By way of comparison, on May 1, S&P stuck with an opinon of "Hold" for Ford. Ford is relatively better off than GM and Chrysler, which are surviving on government loans.
Levy said today that even if GM avoids going bankrupt, GM's proposed restructuring will leave existing common shareholders with only about 1 percent equity of GM. If GM goes bankrupt, its shares will be "almost worthless," he said.
"Strong Sell" is S&P's lowest category, according to a Standard & Poor's spokesman.
It sort of makes us press wags wonder what could be lower than "Strong Sell?" How about, "For God's Sake, Sell!" Or, "By the Time You Read This, It's Too Late to Sell."
Photo: GM --
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