General Motors Corp. will not make a $1 billion debt payment due June 1, its CFO, Ray Young, told reporters on Wednesday. Instead, it is hoping to complete a debt-for-equity exchange or be forced to resort to bankruptcy.
GM's stock plummeted on the news.
Meanwhile, if Fiat doesn't complete its deal with Chrysler by the April 30 deadline, the Italian carmaker could pursue a deal with General Motors instead, according to Reuters.
GM has a strong presence in Fiat's main markets of Europe and Latin America and already shares parts with the Italian group on models such as the Corsa and Grande Punto."That (a deal with GM) would make sense," said SG Securities analyst Eric-Alain Michelis.
In related news, Michigan's Attorney General, Mike Cox wants to make sure that should GM or Chrysler file for bankruptcy, that they do it in his state.
Cox sent letters today to GM president and CEO Fritz Henderson and Chrysler chairman and CEO Robert Nardelli requesting a meeting.
"Any potential bankruptcy filing outside the State of Michigan seems bizarre," Cox wrote in the letters. "More importantly, such a filing would inconvenience and unfairly impact the vast majority of your creditors who are located in Michigan. The costs for many of these creditors to participate in a New York or Delaware bankruptcy is overwhelming and would undoubtedly lead to unjust results."
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