GMAC May Not Be Sold
General Motors Corp. said Tuesday that it might be unable to sell a majority stake in its finance division. The warning came in an annual report that highlighted the myriad risks and financial woes confronting the world’s largest automaker.
GM has been counting on the sale of a 51% stake in General Motors Acceptance Corp. as a way to raise as much as $15 billion in badly needed cash for the struggling automaker. But GM warned anew Tuesday that a deal might not happen.
“We are uncertain at this time if any transaction with respect to GMAC ... will occur or, if any transaction were to occur, on what terms,” GM said.
GM had hoped a new parent for GMAC would bring investment-grade credit ratings to the finance business, which was cut to junk status last year alongside its sliding automotive parent.
In the filing, GM also discussed the threat of a strike at supplier Delphi Corp. that could cripple GM.
GM said it had concluded an internal investigation into Residential Capital Corp., GMAC’s mortgage subsidiary, and determined that cash flow relating to certain mortgage activities was inappropriately classified.
GM also said it began investigating errors in the way it booked credits from suppliers, including Delphi, in April after getting a subpoena from the Securities and Exchange Commission. The SEC, which was seeking information on retroactive price adjustments GM had received from Delphi, is continuing to investigate GM.
Burnham Securities analyst David Healy said GM’s restatements were largely housekeeping measures that would have no effect on cash flow.
Separately, GM said Tuesday that it was laying off hundreds of U.S. salaried workers as part of a plan to bring its North American operations back to profitability.
GM spokesman Robert Herta said he couldn’t give an exact figure, but said the cuts involved fewer than 500 people at 30 sites.
A cut of just under 500 jobs would represent about 1.3% of GM’s U.S. salaried workforce of 36,000. GM has said it planned to cut 7% of its salaried workforce this year.
Shares of Detroit-based GM fell 18 cents to $22.75.
