Deutsche Bank is out with a major call on General Motors (NYSE:GM) downgrading the shares to Sell from Hold, lowering tgt to $0 from $4.
At this point, without external government intervention, their work shows GM may not be able to fund its U.S. operations beyond December. Even if GM’s suppliers do not change the company’s commercial payment terms, GM’s U.S. cash position will likely decline to less than $5 bn by late December, and the firm believes that this level could be overwhelmed by payables coming due in early January.
A government bailout not likely to help shares; lowering GM to Sell (PT zero)
Even if GM succeeds in averting a bankruptcy, Deutsche believes that the company’s future path is likely to be bankruptcy-like. They believe that the U.S. may ultimately need to provide GM with at least $10 bn in loans to keep the company afloat through 2009/2010, and potentially as much as $25 bn to fund GM’s cash burn and restructuring. While they believe that that GM’s secured creditors may get a par recovery, unsecured creditors may get very low recovery. Equity shareholders are unlikely to get anything. Firm is lowering their target on GM equity to $0.
Notablecalls: $4 level will be broken today. If you can find shares to short, GM is prolly headed toward $2.5 in the n-t. It's THAT bad. End of an era.
At this point, without external government intervention, their work shows GM may not be able to fund its U.S. operations beyond December. Even if GM’s suppliers do not change the company’s commercial payment terms, GM’s U.S. cash position will likely decline to less than $5 bn by late December, and the firm believes that this level could be overwhelmed by payables coming due in early January.
A government bailout not likely to help shares; lowering GM to Sell (PT zero)
Even if GM succeeds in averting a bankruptcy, Deutsche believes that the company’s future path is likely to be bankruptcy-like. They believe that the U.S. may ultimately need to provide GM with at least $10 bn in loans to keep the company afloat through 2009/2010, and potentially as much as $25 bn to fund GM’s cash burn and restructuring. While they believe that that GM’s secured creditors may get a par recovery, unsecured creditors may get very low recovery. Equity shareholders are unlikely to get anything. Firm is lowering their target on GM equity to $0.
Notablecalls: $4 level will be broken today. If you can find shares to short, GM is prolly headed toward $2.5 in the n-t. It's THAT bad. End of an era.
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