GM Says It's Not Headed for Bankruptcy

Despite a huge drop in share price, GM says bankruptcy "is not an option."

Oct. 10, 2008— -- The day after General Motors' stock price plummeted to levels not seen since the 1950s, the country's top automaker dismissed speculation that it was headed toward bankruptcy.

"Clearly, we face 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 spokesman Mike Meyerand told this morning.

"GM considering bankruptcy would not be in the interests of our employees, stockholders, suppliers or customers," he said.

Shares of GM plunged to $4.76 a share Thursday, down from nearly $7 the day before, after the ratings agency Standard & Poor's said it was reviewing the automaker's credit rating for a possible downgrade. The company's share price was more than $42.64 about a year ago.

Meyerand said GM was taking steps to raise capital both through the sale of facilities that housed GM plants that closed earlier this year as well as through the possible sale of its Hummer brand.

Meyerand also dismissed a report by the Associated Press today that the company may announce production cuts and possible plant closings as early as next week.

He said the company had "nothing planned at this time at all in that regard."

Meyerand added that GM said in July that it would accelerate some plant closings that the company had announced earlier. In June, the company said it would close four manufacturing plants in North America.

"Mostly what we think they're seeing is that we're moving forward with what we said we would," he said.

GM was not the only American automaker facing a potential credit downgrade. S&P also placed Ford on "CreditWatch" Thursday.

In statements released on both GM and Ford, S&P credit analyst Robert Schulz said the credit placements reflected "the rapidly weakening state of most global automotive markets along with capital market conditions that will remain a major challenge for the foreseeable future."

Ford's share price fell to $2.08 a share Thursday, from $2.66 the day before. The company's share price was more than $9 last year.

In a statement issued to ABC News Detroit affiliate WXYZ, Ford said that while it was disappointed in the drop in share price, it remained focused on growth.

"While we are always disappointed to see our stock value drop, the most important thing we can do for all of our stakeholders is to focus on our transformation plan," the company said. "If we work together to deliver the plan and create an exciting viable Ford delivering profitable growth for all, the external measures will take care of themselves."

The Associated Press contributed to this report.