WASHINGTON (AP) - After a six-hour hearing before the Senate Banking Committee, General Motors Corp. Chairman and CEO Rick Wagoner sat down for a short interview with The Associated Press and expressed optimism that a deal can be reached to help his company through its cash shortage.
GM is seeking up to $18 billion in loans as it tries to weather the worst auto sales climate in a quarter-century. The company is dangerously close to reaching the minimum amount of cash necessary to pay all of its bills.
Here is a portion of the interview:
Q: Do you think you've changed some minds do you feel better about things compared to the first two hearings you had?
A: To be honest, obviously we had very clear instructions and expectations this time as to what the committee was looking for. And our team worked very hard on what I think has been acknowledged generally as a quite complete plan. I think that set a tone that was somewhat different than last time, and obviously it enabled us to focus our preparation. And I think virtually all the questions, there were a lot of them, almost were around the plan in some way shape or form. So from that perspective it seemed like a really constructive dialogue. Maybe we all, all three autos, helped that by having extensive plans filed in advance as opposed to last time, where nothing was filed. I think there were significant - maybe not 100 percent clarity of what they were expecting of us and vice versa - and I think that set a tone last time that was pretty wide open and so this time seems we got more done.
Q: There seems to be consensus, or at least the seeds of a way to settle this emerging, something short of bankruptcy, that March 31 deadline to get the bondholders to take a haircut, UAW President Ron Gettelfinger to make further concessions. Do you see that coming as a strong option?
A: I'm not sure that I can speculate on the specifics, or at least as specifically as you defined it there. My sense is that there were a number of perspectives, which seemed to lean toward supporting. I think Sen. (Bob) Corker had some very specific ideas, and I guess I'm not sure I could 100 percent read how others were reacting to some of the very specific things he was saying.
It seemed there were more and more people this time commenting on the importance of support. And Chairman (Chris) Dodd suggested some potential ways to do that at the end. So I think its certainly early for me to guess how this might come out and what specific conditions be attached. But our own plan suggested that conditions be attached because we thought that was going to be necessary to get everything done. So from that perspective, the direction was not uncomfortable for us because I thought it was the direction we had assumed might be the kind of thing that would work for people. So I hope it does, I hope it gets some momentum.
Q: The chairman said that he doesn't want to write you a blank check but he just doesn't want to pack up and go home either and just leave the industry hanging by a thread. Does that suggest to you that there might be a will for some sort of short-term financing to get you guys through these next two hard months and give the Congress more time to come up with a plan? In the case of Chrysler in 1979 there was six months where they were able to work out something. You don't have that time now.
A: I hope you're right. I certainly understood Chairman Dodd to be supportive of action, but recognizing that he's going to have to - he mentioned at the beginning - he's got to craft legislation, got to get the 60 votes necessary in the Senate. So my sense is that's a pretty big job to do. But I appreciated his saying he's going to stick around and try to see if he could make it happen, so I thought that was favorable.
The analogy of Chrysler taking six months, I think in today's world ... things can move faster and need to move faster. If nothing else, there's a template of what was done last time, so we can build off that.
Q: The prepackaged bankruptcy question came up several times. I know Fritz (GM Chief Operating Officer Fritz Henderson) said there's no Plan B. I know you guys well enough to know that you have a Plan B, you have to have a Plan B. Have you guys at least looked at prepackaged bankruptcy?
A: I think Fritz's statement was a pretty clear one that we really got to give the effort that we're doing now today. ... This is really, as we see it, the best solution. It clearly would, for just being responsible and doing their fiduciary duty, management and the board has be aware of all the options. I can certainly tell you I read a lot about these prepack bankruptcies. ... Everything I have sensed and learned about these various processes bring on a significant amount of risk. And I think we owe it to ourselves and all of our constituents from shareholders to customers to dealers to the UAW members, we really have to pursue any other option that we can, and that remains our focus. It doesn't mean we shouldn't be prepared, but that should not be confused with what we clearly think, based on everything we know today, is the best way to address this.
If we can do the equivalent kind of financial restructuring and the enactment of the plan we laid out in the process which avoids it, I think its a good way to go for everybody involved.
Q: Is that your worst option at this point?
A: There may be even worse options than that one. It's an option we're trying to avoid having to enter into.
Q: It sounds like you seem pretty optimistic that you'll get something short of bankruptcy. Is that a safe assumption?
A: I think it's speculative to say that. There was a lot more conversation around a direction, than what was true last time. It would really be speculative for me to guess how that would play out. ... I don't think we can bet on that yet.
Q: Chairman Dodd has been pushing for the Fed and Treasury to get involved. Based on your discussions with those two agencies, do you see any likelihood that the Bush administration would step in?
A: The comments that have been from the administration have been pretty consistent. I can't really speculate.
Q: Do you agree with UAW President Ron Gettelfinger that you won't make it through the end of the month, if Congress doesn't do something?
A: I didn't say that. We said what we said. Were looking for an advance of up to $4 billion by the end of the month, and beyond that, I'm not going to speculate.
Q: One point was raised, whether you should step down. If Congress made that a stipulation, respectfully, would that be something you'd be willing to do.
A: I'm not going to speculate on that either. I think I made my point pretty clear. I'm doing what I do because I think it adds a lot of value to the company. We brought Bob Lutz back, and his knowledge and experience and having been through the ropes has been very positive. It's not clear to me that experience in this industry should be viewed as a negative, but I'm going to do what's right for the company and I'm going to do it in consultation with the board.
Q: There was a lot of talk about making the bondholders and other creditors secondary to the government. Is that even possible to do even without some sort of Chapter 11 restructuring and how would you even go about doing that?
A: We have collateral. Not all of our assets are secured. We have a collateral pool that we could allocate to the government. How they would value it is something I can't speculate on. We have some secured lending and a lot of unsecured lending as well. So we could at least up to a point, offer collateral for advances, which is what I think they were looking for.
Q: (Chrysler Vice Chairman and President) Jim Press said yesterday that suppliers are starting to demand cash on delivery. Are you guys experiencing that now?
A: Broadly speaking our suppliers have stuck with us very, very well, and I appreciate that. I would say there are a couple situations that we are managing, but on balance I'd say it's really held in there quite well.
(Copyright 2008 by The Associated Press. All Rights Reserved.)
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