May 7, 2009 at 1:00 am

Challenges align for GM

Automaker's shares down 10.3%; earnings report expected to show $6.7B quarterly loss

General Motors Corp. is expected to release an eighth-consecutive quarterly loss today, a key day for the automaker as it also restarts concession talks with the United Auto Workers.

The expectedly gloomy results follow the further deterioration of GM shares, which fell 10.3 percent Wednesday. The drop came one day after the automaker announced a stock deal that would dilute current shareholders' investment.

GM shares fell 19 cents to $1.66, the latest drop for the company's stock, which has lost almost 93 percent of its value in the last year. GM could lose $11.05 a share when quarterly results are released, according to estimates of 10 analysts surveyed by Thomson Financial Network. With more than 610 million outstanding shares, that could mean a loss of more than $6.7 billion.

"They've pretty much announced their intent is to wipe out existing shareholders; I'm surprised the shares have held up as well as they have," said Brad Coulter, director of O'Keefe & Associates, a Bloomfield Hills-based financial consulting firm and turnaround adviser.

Shareholders aren't the only ones reacting negatively to GM's restructuring plan.

In recent days, the UAW has complained to U.S. senators about GM's restructuring plan, which also involves cutting 21,000 U.S. factory jobs by next year -- 7,000 more than originally planned -- and closing 16 of its 47 U.S. manufacturing plants by 2012.

The automaker, surviving on $15.4 billion in federal loans, has until June 1 to reach money-saving concessions with the UAW and bondholders or face a potential Chapter 11 bankruptcy filing. GM President and Chief Executive Officer Fritz Henderson has said a bankruptcy filing is probable but not the preferred route.

GM's concession talks with the UAW are expected to be followed Friday by a meeting between the automaker, UAW President Ron Gettelfinger and the U.S. Treasury Department and auto task force in Washington, D.C.

Meanwhile, new suitors emerged Wednesday for brands GM is trying to sell or phase out as part of its restructuring plan aimed at eliminating about $44 billion in debt.

Renault SA has been in touch with a GM adviser about a deal for the endangered Saturn brand, which would open up the U.S. market to the French carmaker, according to a source.

The French automaker joins other potential suitors that include Roger Penske, who is interested in tapping the brand's dealer network and possibly finding a foreign manufacturer to make new vehicles.

The trick will be partnering an automaker to supply the cars and a distributor in the U.S.

"I can't provide any speculation on who a potential OEM partner could be," Saturn spokesman Steve Janisse said. "There have been a number of meetings with potential partners, but it's really going to be up to the eventual buyer who they want to partner with to provide product for the future of Saturn."

GM has hired consultant Stephen Girsky, who has been an adviser to the United Auto Workers and GM, and is a well-known former auto analyst for Morgan Stanley, to pursue a deal for the brand.

Meanwhile, Hong Kong-based carmaker Geely Automobile Holdings has submitted a bid for Saab, the Wall Street Journal reported.

Christine Tierney contributed to this report.

GM plant actions

GM will temporarily close all or portions of 23 engine, transmission and parts factories across the United States for several weeks because vehicle-making plants also will be idled. Spokeswoman Sharon Basel told the Associated Press it's because of plans announced two weeks ago to shutter 13 assembly plants for up to 11 weeks to control growing inventory. The additional closures affect more than 18,000 hourly and salaried workers. Of the 23 factories, the longest full-plant shutdowns will occur at the Baltimore and Toledo, Ohio, transmission factories, both of which will close for eight weeks. The Willow Run Transmission plant in Ypsilanti Township will see one of its assembly lines closed for nine weeks from May 11 through July 13, Basel said.