GM posts $6 billion loss, burns $10.2 billion in cash as sales fall

General Motors, facing a June 1 U.S. restructuring deadline to avoid bankruptcy, posted a $6 billion net loss in the first quarter and burned through $10.2 billion in cash as global auto sales plunged.

GM had $11.6 in cash reserves on March 31, down from $14.2 billion at the end of the fourth quarter. The cash burn in the latest quarter was partially offset by $13.4 billion in government loans to keep the biggest U.S. automaker solvent.

The company's seventh straight quarterly loss compared with a $3.3 billion loss a year earlier and added to $82 billion in cumulative annual losses since 2004. GM's global revenue declined 47 percent to $22.4 billion as unit sales dropped 28 percent.

"Our first-quarter results underscore the importance of executing GM's revised Viability Plan, which goes further and faster to lower our break-even point," said CEO Fritz Henderson in a statement. "Our plan is designed to fix the fundamentals of our business by restructuring and deleveraging our balance sheet, enhancing our revenue capability and dramatically reducing costs."

The first-quarter operating loss was $5.9 billion, compared with an adjusted net loss of $381 million in the first quarter last year.

GM has received an additional $2 billion in U.S. loans since the end of the first quarter. The company said it would explain its cash position in more detail in coming days when it files its 10-Q report to the U.S. Securities and Exchange Commission.

GM's revenue decline in the first quarter was driven by sharp cutbacks in production. That was especially evident in North America, where revenue fell 50 percent to $12.3 billion. GM cut North American production 58 percent and managed to reduce vehicle inventory by 105,000 units to 767,000.

GM reported a net loss of $3.2 billion in North America. On an operating basis, the loss was $2.8 billion, helped by rising residual values on its vehicles.

Deadline looms

GM is racing to beat the U.S. auto task force's June 1 deadline to complete a turnaround and secure deals with the UAW and bondholders to reduce debt.

Without additional concessions, Henderson, who took over more than a month ago from the ousted Rick Wagoner, has said the automaker will file for bankruptcy.

Even if it clinches debt-restructuring deals, GM said this week it could issue up to 60 billion new shares to pay off its debt to the government, bondholders and the UAW.

That flood of new shares would leave current GM investors with 1 percent of the restructured company and take the value of the stock to less than 2 cents.

GM shares fell 10.3 percent on Wednesday to $1.66.

"We would like to see actions that will ultimately position GM to be a smaller but profitable automaker along with details on how it will achieve this," S&P equity analyst Efraim Levy said in a statement before the results were released Thursday. "Unfortunately for GM current shareholders, we do not expect them to meaningfully share in any recovery."

GM has asked its three major creditor groups to write off at least $43 billion in debt in exchange for ownership stakes in a restructured company.

GM bondholders, who are owed $27 billion, have also been offered new stock in exchange for writing off debt in a bond exchange the automaker launched last week.

GM is targeting a reduction of at least $24 billion, or 90 percent, of its bond debt under the plan and has warned that it could be forced into bankruptcy if that cannot be achieved.

Barclays Capital analyst Brian Johnson said the success of bankrupt Chrysler LLC in winning approval to sell most of its assets quickly made it more likely that GM would follow its smaller rival into court protection.

By Jesse Snyder and Jamie LaReau- Automotive News