GM Says Bankruptcy Is Not an Option

DETROIT (Reuters)- General Motors Corp said it was not considering bankruptcy protectionas market turmoil continues and Barclays Capital said on Friday thatthe company’s cash needs were increasing.

Barclays cut its share-price target on GM to $4 on Friday, renewing potential pressure on the largest U.S. automaker.

GM shares fell as much as 16 percent to $4 in early New York StockExchange trade, their lowest price since 1949, before recovering. Theyhad plunged 31 percent on Thursday following news of a potential creditratings downgrade and a forecaster’s report that global auto marketscould be in danger of an "outright collapse" in 2009.

The company, which posted a second-quarter net loss of $15.5billion, announced plans in July to improve its liquidity by about $15billion by the end of 2009, about two-thirds through cost cuts and therest through asset sales and new borrowing.

"Clearly we face unprecedented challenges related to uncertainty inthe financial markets globally and weakening economic fundamentals inmany key markets," GM said in a statement on Friday.

"But bankruptcy protection is not an option GM is considering," itsaid. "Bankruptcy would not be in the interests of our employees,stockholders, suppliers or customers."

On Thursday, Standard & Poor’s said it might cut the credit ratings of GM and rival Ford Motor Co deeper into "junk."

Ford shares also dropped on Thursday, closing down 22 percent and setting a 26-year low on the NYSE after the S&P release.

The ratings statement followed influential industry forecaster J.D.Power and Associates’ warning that U.S. auto sales would be even lowerin 2009 than in 2008 and that global auto markets in 2009 were indanger of an "outright collapse."

Barclays said on Friday that heightened risks of a sharper decline in worldwide auto sales would also increase GM’s cash needs.

"With auto sales stalled in the (United States) and beginning tocontract in the rest of the world, we believe GM’s cash needs areincreasing," Barclays analyst Brian Johnson said in a note for clients.

Johnson said he estimated that GM would need to raise $10.3 billionto maintain liquidity of $14 billion through 2009. That figure was upfrom his earlier estimate that put GM’s cash-raising need at $7.3billion over the same period.

GM shares were down unchanged at $4.76 in morning trading, while Ford rose 10 cents, or 4.8 percent, to $2.18.

(Reporting by David Bailey and Kevin Krolicki; Editing by Lisa Von Ahn)