GM bankruptcy 'not impossible', says Merrill
General Motors was cut to ‘underperform’ from ‘buy’ by Merrill Lynch, which said “bankruptcy is not impossible” for the largest US automaker.
By Bloomberg |
LONDON/MICHIGAN: General Motors was cut to ���underperform��� from ���buy��� by Merrill Lynch, which said ���bankruptcy is not impossible��� for the largest US automaker. ���The key change in our outlook is a much lower forecast for US auto sales that is driving a higher cash burn necessitating a much larger capital raise than the market is currently anticipating,��� New York-based analyst John Murphy wrote in a note to clients on Wednesday.
The downgrade follows GM���s report on Tuesday that its June US auto sales fell 18%. Bank of America said last week that the Detroit-based automaker may need additional funding of as much as $8 billion. JPMorgan Chase has estimated GM may need to raise $10 billion as early as this quarter.
GM fell 70 cents, or 6%, to $11.05 in early morning trades on New York Stock Exchange composite trading. The shares have declined 71% in the past 12 months, the biggest drop among the 30 companies in the Dow Jones Industrial Average.
Company spokeswoman Geri Lama didn���t immediately respond to telephone calls or emails seeking comment. The automaker said on Tuesday that it plans to cut north American production this quarter 12% to about 9,00,000 vehicles.
The downgrade follows GM���s report on Tuesday that its June US auto sales fell 18%. Bank of America said last week that the Detroit-based automaker may need additional funding of as much as $8 billion. JPMorgan Chase has estimated GM may need to raise $10 billion as early as this quarter.
GM fell 70 cents, or 6%, to $11.05 in early morning trades on New York Stock Exchange composite trading. The shares have declined 71% in the past 12 months, the biggest drop among the 30 companies in the Dow Jones Industrial Average.
Company spokeswoman Geri Lama didn���t immediately respond to telephone calls or emails seeking comment. The automaker said on Tuesday that it plans to cut north American production this quarter 12% to about 9,00,000 vehicles.
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