GM shares rebound on news of bailout deal
DETROIT (Reuters) - Shares of General Motors Corp GM.N and Ford Motor Co (F.N) jumped on Thursday, rebounding from multi-decade lows after U.S. senators reached a bipartisan agreement on a government bailout for the struggling U.S. automakers.
U.S. Senators including Michigan Democrat Carl Levin, Missouri Republican Christopher Bond and Ohio Republican George Voinovich plan a news conference at 2:30 p.m. EST, to announce their agreement on bipartisan auto aid, a Senate Democratic aide said on Thursday.
Details of the agreement were not immediately available.
Shares of GM jumped 76 cents, or 27 percent, to $3.75 on the New York Stock Exchange, after tumbling as much as 39 percent to hit a 70-year low.
Ford shares surged 28 percent, or 36 cents, to $1.63, after hitting a 26-year low of $1.02 on fears that lawmakers would fail to reach a compromise on a proposed $25 billion bailout for U.S. automakers before Congress adjourns this week.
"We're still analyzing the situation, but the feeling is that without a loan package, the probability of GM or Chrysler going bankrupt in early 2009 is extremely high, at about 75 percent," said George Magliano, a forecasting director at influential auto industry tracking firm Global Insight.
Even with a government bailout, Magliano said he saw a 25 percent chance of bankruptcy for either automaker amid the credit crisis that has pushed U.S. auto sales to 25-year lows.
Without a deal this week, any bailout would likely have to wait until the Obama administration takes over in January. By that time, GM has warned, it would run desperately short of its minimum cash needs.
Failure to craft a deal carries the risk that one or more of the U.S. automakers -- GM, Ford or Chrysler LLC CBS.UL -- could be forced into bankruptcy, analysts have warned.
(Reporting by Soyoung Kim, editing by Matthew Lewis)
