By David Bailey and Kevin Krolicki
DETROIT (Reuters) - General Motors Corp
GM shares have fallen near a 60-year low, and Ford shares to a 26-year low on fears the global financial crisis could derail turnaround plans at the two biggest U.S.-based automakers.
Ford Chief Executive Alan Mulally told Reuters a bankruptcy filing "makes no sense" for the No. 2 U.S. automaker and GM said in a statement it was not an option the No. 1 U.S. automaker was considering.
GM's statement came a day after its shares plunged by 31 percent, a deeper one-day decline than GM shares saw after the September 11, 2001, attacks or during the 1987 market crash.
Ford, which also saw its shares plummet on Thursday, announced that the chief financial officer who was the architect of a crucial 2006 borrowing program would retire, to be replaced by an executive credited with leading the turnaround of the company's European operations.
GM said its faced "unprecedented challenges related to uncertainty in the financial markets globally and weakening economic fundamentals in many key markets.
"But bankruptcy protection is not an option GM is considering," the statement said. "Bankruptcy would not be in the interests of our employees, stockholders, suppliers or customers."
GM shares fell as low as $4 early on Friday, the lowest price for the stock since 1949, but recovered after the statement and ended up 13 cents, or 2.7 percent higher, at $4.89 on the New York Stock Exchange.
Ford shares closed down 9 cents, or 4.3 percent lower, to $1.99 on Friday, but off a low of $1.88 for the day. The stock had fallen 22 percent on Thursday.
CASH NEEDS
Earlier on Friday, Barclays Capital cut its price target for GM, saying the company's cash needs were increasing because of the risk of weaker global auto sales.
"With auto sales stalled in the (United States) and beginning to contract in the rest of the world, we believe GM's cash needs are increasing," Barclays analyst Brian Johnson said in a note for clients.
Johnson said he estimated that GM would need to raise $10.3 billion to maintain liquidity of $14 billion through 2009. That figure was up from his earlier estimate that put GM's cash-raising need at $7.3 billion over the same period.
The more cautious outlook on GM by Barclays was one of several from analysts this week that pointed to deepening risks for the automaker's turnaround efforts.
Credit ratings agency Standard & Poor's said on Thursday that both GM and Ford had adequate liquidity for 2008, but deteriorating industry fundamentals would make liquidity a serious challenge in 2009.
Also on Thursday, industry forecaster J.D. Power and Associates said the global auto markets could be in danger of an "outright collapse" in 2009 as a slowdown that began in North America spills over to other markets.
U.S. auto sales have fallen for three consecutive years to hit 15-year lows in recent months.
Many analysts now expect further declines in 2009 and some slowing in other regions around the world, adding pressure on GM and other U.S. automakers that have been restructuring.
GM, which posted a second-quarter net loss of $15.5 billion, announced plans in July to improve its liquidity by about $15 billion by the end of 2009, about two-thirds through cost cuts and the rest through asset sales and new borrowing.
FORD CHANGING CFO
Ford, which posted a $2.7 billion net loss in the second quarter, went to capital markets to raise more than $23 billion in late 2006.
Don Leclair, 56, who has been Ford chief financial officer since 2003 and oversaw that borrowing, will retire, the automaker said on Friday.
Leclair, 56, will be succeeded by Lewis Booth, 59, who has been leading Ford's European operations and is seen as an eventual successor to Mulally.
Analysts have credited the Ford borrowing program with allowing it to buy more time for its own restructuring during the downturn.
Ford's market value at about $4.5 billion is now larger than GM's at nearly $2.8 billion, although GM is the larger automaker by vehicle sales.
Ford has accelerated plans to convert North American truck plants to build more fuel-efficient cars and bring in new European-designed vehicles. Ford has also cut production and salaried jobs and offered buyouts to hourly U.S. workers.
Mulally said Ford was committed to matching production with consumer demand amid signs of a wider slowdown.
"Not only is the U.S. slowing, but Europe is slowing and Asia-Pacific is slowing, so we will update everyone when we do our third quarter, which is just in a few weeks, on what our future plans are to adjust the production to the real demand," Mulally said.
(Reporting by David Bailey and Kevin Krolicki; Editing by Gerald E. McCormick and Tim Dobbyn)
