Finance and Economic

The typical analyst research note is not page-turning reading: Turgid prose, heavy on numbers and financial jargon.

This one was different.

In a March 9 report on Furniture Brands International, veteran analyst Budd Bugatch of Raymond James took the company’s management and board to the woodshed.

The issue: Incentive payments to seven top executives, amounting to more than $10 million, at a time when sales were shrinking and the company was dipping into red ink. Bugatch called the pay "excessive, unreasonable and disheartening."

"The company is not alone in the industry in dealing with hard times," wrote Bugatch. "But the leadership of this company — starting at the boardroom and extending through the executive suite — is not, in our opinion, acting responsibly or in the interests of all of the company’s stakeholders."

Disagreement about Furniture Brands’ executive compensation practices was one reason T. Scott King resigned abruptly from the company’s board of directors in February. King had been a member of Furniture Brands’ human resources committee.

The company defended the long-term incentive plan, which was established almost three years ago.

The payments were based on free cash flow, rather than on profitability or the company’s stock price payday loan online. Furniture Brands executives have been preaching the mantra that "cash is king" in a rough economy. The goal of the two-year incentive program was to stabilize Furniture Brands and position it for future growth, according to the company.

In any case, the payment of "extremely high bonuses" was the primary culprit in forcing Furniture Brands to use $9 million in cash from operations in the first quarter, Stifel Nicolaus analyst John Baugh wrote this month.

The company’s board of directors planned to re-evaluate the company’s executive compensation for this year and 2010, Chairman and Chief Executive Ralph Scozzafava said this month during a conference call with analysts. Scozzafava, who received a $3 million incentive payment, defended the company’s previous payment structure, calling it "absolutely well structured."

"Our philosophy here is that we pay for performance," Scozzafava said. "And we’ve had big elements of our compensation structure not pay out. Our short-term incentive programs haven’t paid out in a couple of years."

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Japan’s industrial production jumped the most in 56 years in April and India’s economy expanded more than economists forecast in the first quarter, adding to evidence that the global recession is easing.

Output in Japan surged 5.2 percent from March, the Trade Ministry said in Tokyo. India’s economy, Asia’s third-biggest, grew 5.8 percent, more than the 5 percent analysts predicted. Other releases today showed U.K. house prices unexpectedly rose in May and German retail sales climbed the most in four months. In the U.S., a report due later today may show consumer confidence is improving.

The world economy is showing signs of recovery from its worst recession since the Great Depression after central banks and governments cut interest rates close to zero and pumped more than $13 trillion into their economies. The International Monetary Fund nevertheless expects the global economy to contract 1.3 percent this year and some strategists say it’s too early to give the all-clear.

“The worst of it is probably coming to an end,” Stephen King, chief economist at HSBC Holdings Plc, said in an interview on Bloomberg Television in London today. At the same time, “the level of activity around the world is still remarkably depressed. We’ll see three to four months of pretty good news. But then all bets are off.”

Stock Markets

Reports on the U.S. economy today gave a mixed picture. While business activity contracted at a faster pace than forecast this month, consumer confidence rose to the highest since September.

Investors are anticipating a global recovery. The MSCI World Index of 23 major stock markets rose 1 percent to 946.96 points today and is poised to extend its longest winning streak since the credit-market seizure began. The dollar weakened against the Australian and New Zealand currencies as investors sought higher yields. Crude oil rose to the highest in almost seven months.

Consumer sentiment in the U.K. matched the highest level in almost a year this month. Poland today posted the only growth among the European Union’s 10 eastern members so far in the first quarter. Households in Japan are the least pessimistic they’ve been in 10 months.

“It’s safe to argue that we’ve turned the page after severe weakness in the first quarter,” said David Cohen, head of Asian economic forecasting at Action Economics in Singapore.

Made in America

Asia’s ability to lead the world economy out of recession will probably be hampered by its dependence of exports to a U.S. economy still burdened by excessive debt, said Stephen Roach, chairman of Morgan Stanley Asia.

“The region’s fate remains made in America,” he said in an e-mailed note. “That is where hopes of an Asia-led rebound are most tenuous. After a dozen years of excess, the overextended American consumer is tapped out.”

Rising unemployment and credit conditions around the world also mean any global recovery is likely to be weak.

The U.S. unemployment rate is already the highest in a quarter century. Japan’s jobless rate climbed to a five-year high in April, prompting households to pare spending for a record 14th month, separate reports today showed no fax pay day loan.

Even after April’s output gain, Japanese production is running at two-thirds of last year’s levels, saddling manufacturers such as Nikon Corp. with workers and factories they no longer need. That’s calling into question the health of a stock market rally that’s seen the Nikkei 225 Stock Average surge 35 percent since March 10, says Andrew Bell, head of research and strategy at Rensburg Sheppards Plc in London.

Heart of Dilemma

“The actual level is about where Japanese industrial production was in 1980,” said Bell. “That goes to the heart of the dilemma over the stock market. How far can you travel on things getting worse less rapidly or recovering a small amount of the ground lost?”

Federal Reserve Chairman Ben S. Bernanke is also struggling to bring down borrowing costs to revive the U.S. housing market. Mortgage rates are almost back to where they were in March, before the 30-year rate fell to a record and sparked a refinancing boom.

Bond yields are rising. U.S. Treasuries today headed for their steepest two-month loss since 2003 on concern about President Barack Obama’s record borrowing spree. In the euro region, the European Central Bank said today that loans to households and companies grew at the slowest pace on record in April.

Credit Flows

“There are still a whole lot of problems in financial markets and credit flows,” said Matthew Sharratt, economist at Bank of America in London.

For now, economies get a fillip in coming months as companies replace stockpiles ran down during the depths of the recession. U.S. industrial production contracted the least since October last month and Japanese manufacturers plan to boost output in May and June. Exports from Japan expanded last month from March as China’s $586 billion stimulus package spurs demand.

China’s prospects have also improved, analysts say. The world’s third-largest economy will expand 7.5 percent this year, according to the median estimate of 14 economists surveyed by Bloomberg News, up from a 7.1 percent forecast in February.

“What we’re seeing is a good old-fashioned kind of inventory rebuild associated with the fact that supply collapsed further than demand over the last 12 months and we’re now seeing a recovery in that supply,” said King.

India’s faster-than-expected growth makes it easier for re- elected Prime Minister Manmohan Singh to capitalize on the improving economy. The Sensitive stock index has surged 20 percent since Singh’s May 16 electoral triumph on optimism a coalition without communist parties will allow him to sell state assets and accept more foreign investments.

“There’s been an improvement and investors seem to have recovered from the near-fatal heart attack at the turn of the year,” said Sharratt. “It now has to translate into activity.”

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The employment situation in the states showed signs of stabilizing last month.

The unemployment rate declined in 21 states in April, compared with the month before, while 11 states had no rate change, according to federal data released Friday.

The work situation, however, deteriorated in 18 states and Washington, D.C., last month, according to the Bureau of Labor Statistics.

A month earlier, unemployment rates rose in 46 states.

In April, Michigan once again led the nation with a jobless rate of 12.9%, up from 12.6% in March. Oregon, South Carolina, Rhode Island, California, North Carolina, Nevada and Ohio all had rates exceeding 10%.

Nationally, the unemployment rate rose to 8.9% in April, up from 8.5% a month earlier.

Missouri saw the biggest drop in unemployment, falling 0.6% to an 8.1% rate in April. Alaska followed with a 0.4% decline to 8%.

Some states, however, suffered rising rates. West Virginia fared the largest jump in joblessness, with its rate climbing 0 car insurance quotes.7% to 7.5% in April. Rhode Island and Ohio followed with 0.5% increases to 11.1% and 10.2% respectively.

State budget woes

States and their budgets have been hammered by rising unemployment rates. Income and sales tax revenues decline as people lose their jobs and rein in their spending.

Many state leaders are scrambling now to close last-minute budget gaps that opened when April tax revenues came in below estimates. The fiscal year in 46 states ends on June 30, and unlike the federal government, states cannot run deficits.

State and local officials are also working to deploy federal stimulus dollars that are starting to flow to them. The White House estimates that the funds have created or saved 150,000 jobs and will create or save another 600,000 by August. 

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Chrysler is on the verge of a Motor City miracle: a make-over in bankruptcy that will bring in new management under Italy’s Fiat SpA and its highly touted small car technology.

Rescued from liquidation with $8.6 billion of emergency U.S. government loans and bankruptcy financing, Chrysler has been given a new lease on life.

But what’s next?

The new Chrysler will be up against formidable and entrenched competitors in the small vehicle market like Honda Motor Co.

It will also struggle with the aftermath of freezing product development to conserve cash, analysts said.

But in what could be its biggest challenge, the No. 3 U.S. automaker has to break free of a reliance on aggressive discounting and a reputation for poor quality.

In the short term, analysts said Chrysler will have to find a way to hang on until early 2011, when Fiat is expected to debut the first of its smaller cars in the U.S. market.

“The big challenge is not getting through this bankruptcy,” IHS Global Insight analyst Aaron Bragman said. “The big challenge is what do they do between the end of this bankruptcy and the arrival of the Fiat vehicles?”

“There is still at least 18 months they have to try to survive in a down market with largely the same showroom and really no extra cash to get them through it,” Bragman said bad credit payday loan.

Industry analyst and consultant Maryann Keller said that estimates of the investments required for the new Chrysler after bankruptcy have been way too low.

“They have to be rebuilt, and we don’t even know if Chrysler can be rebuilt,” Keller said. “There hasn’t been any development work done in the last 12 months.”

Chrysler, bought by Cerberus Capital Management from Germany’s Daimler AG in August 2007, filed for bankruptcy protection on April 30 under the direction of the Obama administration’s auto task force.

Based in Auburn Hills, Michigan, Chrysler was seeking bankruptcy court approval on Wednesday for an assets sale, putting it ahead of an aggressive government schedule.

Chrysler has achieved more to cut costs in a shorter time than most analysts thought possible, including wiping out plants and jobs along with dealerships. Chrysler is due to cut nearly 800 dealerships, or 25 percent of its network, by early June.

It has used the bankruptcy process to eliminate $6.9 billion in debt and to halve a $4.5 billion payment that was due to a union trust fund by making it part of a note and part equity that could be sold later. 

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DETROIT — General Motors Corp. will give the United Auto Workers up to 20 percent of its common stock, $6.5 billion of preferred shares and a $2.5 billion note to fund a trust that will take over retiree health care costs starting next year as part of an agreement the automaker made while it tries to reorganize outside of bankruptcy.

The union’s trust also will get a seat on GM’s new board of directors, although that seat will have to vote at the direction of the other independent directors. Plant-level union officials met in Detroit on Tuesday to hear details of the agreement that GM, the UAW and the government reached last week. Several local presidents said after the briefing that they voted unanimously to recommend that members approve the concessions when they vote today and Thursday.

Local UAW leaders say the health care trust fund agreement did not identify 14 factories that GM intends to close. Those are part of GM’s restructuring plan to be submitted to the government by a Monday deadline, said one official, who spoke on condition of anonymity because the details of the meeting have not been presented to union members no fax quick cash. The company did commit to reopening three closed assembly plants and one stamping factory if demand warrants, according to the summary sheet. Those factories were not identified.

Members of the Canadian Auto Workers union earlier this week approved wage reductions and other concessions in an attempt to allow GM to reorganize outside of bankruptcy court, but GM’s unsecured bondholders have resisted an offer to take a 10 percent stake in the company to wipe out $27 billion in debt. Analysts say it’s unlikely enough bondholders will approve the offer, meaning GM would still be forced into bankruptcy protection by Monday. GM’s bondholders have argued that the offer they’ve received gives them too small a stake for the amount they are owed.

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HELSINKI – Nokia on Monday began rolling out its much-anticipated online software and content store, Ovi Store, as it aims to follow the success of Apple’s App Store.

Nokia said it had started moving Ovi Store to production servers, preparing for the global commercial launch, and the store was opened to users of a few of its phone models in Australia and Singapore on Monday.

Nokia has promised to open the store globally this week.

To cope with slowing phone demand Nokia is building a new business from mobile Internet services – like games or maps – but is scaling back separate investment plans due to the slowdown, and focusing on merging the delivery of services.

Nokia, which made its first ever quarterly pretax loss in January-March, is cutting annual costs at its key handset unit alone by more than 700 million euros ($979.7 million U.S.) to counter plunging phone demand.

The Apple App Store has proved extremely popular, with one billion applications downloaded in less than a year, and operators and technology firms including Vodafone Nokia, and Microsoft now want a piece of the pie.

However, analysts say firms will likely struggle to match the success of Apple’s store when creating their own stores, hampered by technical issues, a lack of applications and increased competition.

"Ovi Store is in some ways the last castle for Nokia – both N-Gage and ‘Comes with Music’ are industry laughing stocks," said Global Crown analyst Tero Kuittinen.

Games and music have been spearheads of Nokia’s services push, but its mobile gaming offering has had little success, and its much-hyped music offering, which bundles free music downloads with a sold phone, has also found few clients cash advance payday loan.

Nokia will also sell games and music through the Ovi Store.

"Ovi Store is where Nokia tries to re-group and muster its forces for a counter-offensive," Kuittinen said.

After Apple introduced the iPhone in 2007, handset vendor rivals all focused their efforts on building similar, sleek devices with large touch screens – a situation that is being repeated in 2009 in the rush to build a rival App Store.

Research firm Strategy Analytics has forecast the value of the mobile content market – including downloadable games, ringtones, wallpapers, video, mobile TV, text alerts and mobile Web browsing – to grow 15 percent this year to $62 billion (U.S.).

Nokia shares rose slightly on the news, up 1.3 per cent at 10.76 euros at 1501 GMT.

The store will combine Nokia’s legacy software distribution channels such as the Download! service, which has been pre-installed on more than 200 million phones. However, only a fraction of those phones have ever been used to buy a program through the service.

In late April, Nokia said it would have operator billing – something it expects to boost takeup – in place in eight countries for its launch, but dropped an earlier goal of including the key U.S. market from the start.

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While their biggest customers may continue to wallow in recession into 2010, the oil-producing nations of the Persian Gulf are again luring foreign investment and looking for places to park their own wealth.

Crude prices that have stabilized above $50 a barrel mean the Middle East’s oil-rich economies are likely to pull out of the global financial crisis sooner than the rest of the world. Saudi Arabia, the largest Arab economy and the world’s biggest oil exporter, is attracting renewed interest from investors including leveraged-buyout firm KKR & Co. Qatar and Abu Dhabi have returned to international capital markets.

Stock markets are rallying across the region, led by Saudi Arabia, whose Tadawul All Share Index ended last week up 26 percent for the year to date, after tumbling 56.5 percent in 2008.

“The expected resilience of oil prices puts the Gulf countries in a relatively privileged position compared to Europe and the U.S.,” says Eckart Woertz, an economist at the Gulf Research Center in Dubai. “In 2010, that is likely to lead to some resumption of growth, unlike in developed-market economies.”

Crude oil traded at $61.61 a barrel on the New York Mercantile Exchange at 10:33 a.m. in Singapore — up 81 percent from around $34 on Feb. 12. Prices will remain above $50 for the rest of this year and top $60 next year, according to the median forecast of analysts surveyed by Bloomberg.

Providing a Cushion

While that’s still less than half the record $147.27 a barrel reached last July, savings built up during the boom from 2003 to 2008 are providing a cushion for most of the Gulf’s petroleum producers to get them through the worst recession since World War II.

“Oil prices are going up and confidence levels are coming back, things are going in the right direction,” Mohammed al- Shihi, the director-general of the U.A.E. economy ministry, told a conference today in Abu Dhabi.

Saudi Arabia’s economy will shrink 0.9 percent this year, according to the International Monetary Fund’s April forecast, while the United Arab Emirates is projected to decline 0.6 percent and Kuwait 1.1 percent. By comparison, the U.S. may contract 2.8 percent, the European Union 4 percent and Japan 6.2 percent, the IMF says.

By next year, the IMF expects the Gulf oil states to resume expanding, with Saudi Arabia growing 2.9 percent and Kuwait 2.4 percent, while advanced economies as a whole have no growth.

Oil Reserves

As a result, the six states in the Gulf Cooperation Council, which hold 40 percent of global oil reserves, are already luring fresh capital from abroad. The Qatari joint venture of Newbury, England-based Vodafone Group Plc, the world’s largest mobile-phone company, raised about $1 billion last month in the country’s first initial public offering in nearly a year.

Gulf oil exporters “have accumulated such big financial surpluses, and with ambitious expansionary fiscal budgets, things will be OK,” National Bank of Kuwait SAK Chief Executive Officer Ibrahim Dabdoub said in a May 14 interview at the World Economic Forum in Jordan. “We have started to see some green shoots here and there.”

International investors have taken notice. A Euromoney investment conference last week in the Saudi capital of Riyadh drew 1,600 participants, including representatives of Bank of New York Mellon, HSBC and Barclays Capital. Saudis in traditional white robes and red-and-white headdresses crowded a five-star hotel along with businessmen in suits from the U.S. and Europe.

Best Prospects

Abu Dhabi, with more than 90 percent of the emirates’ oil, has the best prospects in the region, along with Saudi Arabia and Qatar, the world’s largest exporter of liquid natural gas, says Simon Williams, chief regional economist at HSBC Holdings Plc in Dubai.

By contrast, the picture is a good deal grimmer in Dubai, which lacks the oil reserves of its U credit reports.A.E. partner Abu Dhabi and other neighbors. Dubai’s real-estate boom crashed last year, and it will continue to flounder, says Timothy Ash, head of emerging-market economics in London at Royal Bank of Scotland Group Plc.

The second-biggest of seven states making up the U.A.E., Dubai ran up debts of $80 billion and had to cancel projects including a waterfront development twice the size of Hong Kong Island. The traffic jams that clogged roads last year are gone; once-scarce taxis now sit outside residential buildings waiting for fares. Dubai property prices may fall as much as 70 percent from their peak, UBS AG predicts.

Hiring in Dubai

Even in Dubai, though, Emaar Properties PJSC, the U.A.E.’s biggest real-estate developer, says it is hiring 1,600 people for its retail, hospitality and leisure businesses, including three new attractions at Emaar’s Dubai Mall and three new hotels. And in the other Gulf economies, the presence of oil translates into a quickening of prospects.

“There is inherent stability in these markets,” says Emad Mostaque, a London-based Middle East equity-fund manager for Pictet Asset Management Ltd.,which oversees about $100 billion globally. “Next year you will see this region outperform other emerging and global markets.”

Mostaque says he is particularly interested these days in shares of Saudi consumer companies such as Riyadh-based food producer Almarai Co.

KKR is studying Saudi investments as it aims to take advantage of the region’s “most attractive markets,” says Makram Azar, head of Middle Eastern operations. This month, KKR named Ford M. Fraker, former U.S. ambassador to Saudi Arabia, as a senior adviser.

Diminishing Risk

Investors perceive diminishing risk on Gulf-region bonds, according to trading in credit default swaps. The cost of protecting against default by the Dubai government fell to 488 basis points on May 8 from a record high of 977 in February, CMA Datavision prices show. Saudi Arabia’s bond-default risk declined to about 162 basis points last week, from 335 basis points in February.

The apparent end of plans for a Gulf monetary union — the U.A.E. pulled out of the project on May 20 — won’t alter the region’s growth outlook because all the countries in the proposed union except for Kuwait already peg their currencies to the dollar, Woertz says.

In another sign that markets are opening up for Gulf borrowers, Qatar and Abu Dhabi raised $6 billion by selling bonds to international investors last month. Aldar Properties PJSC, Abu Dhabi’s biggest real-estate developer, sold $1.25 billion of 5-year notes May 21, becoming the first such firm in the U.A.E. to issue debt since August.

Sovereign Wealth

Meanwhile, Gulf sovereign-wealth funds, which turned their attention inward to shoring up domestic banks and domestic stock markets, now have an “appetite and cash available for selected strategic acquisitions” abroad, Woertz says.

Saudi Arabia has sovereign assets of around $438 billion, up from $335 billion at the start of 2008, according to estimates by RGE Monitor in New York. Abu Dhabi holds a fund of about $300 billion, and Kuwait has about $210 billion.

In March, Abu Dhabi agreed to buy 9.1 percent of German carmaker Daimler AG for 1.95 billion euros ($2.6 billion). Earlier this month it won approval to buy Nova Chemicals Corp., Canada’s largest chemical maker, for $499 million.

The region’s continued dependence on oil and gas is a “strength, not a weakness” that generates long-term surpluses, says HSBC’S Williams.

“I expect all of the region’s economies to fare well, including Dubai, which has a compelling economic case as the service hub for a rapidly growing and prosperous part of the world,” he says.

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NEW YORK–Facebook and Twitter have helped make social networking a household word. Now they need to make money.

Facebook chief executive Mark Zuckerberg and Twitter co-founder Biz Stone outlined several initiatives to monetize social media at the Reuters Global Technology Summit in New York this week.

Analysts and investors, in search of the next Google-like hit, are paying close attention to the breakneck speed at which Facebook and Twitter are adding new users.

While the popularity of the two social-media firms has yet to translate into the kind of revenue-generating machine that Google Inc. developed with its search advertising business, some say Facebook and Twitter have become so central to the Internet experience that they are inherently valuable.

"Both are new ways of communicating. And when you have a new way of communicating … you benefit people enough so that there is going to be value there," said Tim Draper, managing director of venture-capital firm Draper Fisher Jurvetson. In April, Twitter’s website attracted 17 million unique visitors in the United States, up sharply from 9.3 million the month before. Facebook grew to 200 million active users in April, less than a year after hitting 100 million users.

Facebook sees advertising as its primary money-making strategy, Zuckerberg said, noting that the company could eventually offer advertisements not just on its own website, but on any other sites that interact with Facebook low rates payday advance.

Stone said Twitter was less interested in generating revenue through advertising than it was in offering premium features for commercial users of Twitter.

The divergent strategies underscore the novelty of social networking and the lack of an established business model.

Pacific Crest Securities analyst Steve Weinstein said advertising is probably the quickest way for social services to make money in the short term, but a purely ad-supported model does not take full advantage of business opportunities created by social media.

"The amount of real-time information being created by Twitter is unparalleled," he said. Creating a better way to filter that information has great business potential.

Because the value of social-media sites improves as they become larger, Weinstein said the important thing now is for Facebook and Twitter to grow their networks and tread carefully with any monetization efforts that might inhibit that growth.

"The last thing you want to do is rush monetization and kill the golden goose," Weinstein said.

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As tens of millions tank up and hit the road for Memorial Day weekend, gas prices are rising fast enough to revive painful memories of the $4-a-gallon summer of 2008.

Rest easy: The economic slack created by the recession all but guarantees prices won’t spike the way they did last year, analysts say.

The average retail gas price was $2.22 a gallon in the city of St. Louis and surrounding Missouri counties on Wednesday, according to the auto club AAA. That’s almost 30 cents a gallon higher than a month ago, but $1.43 less than the same date last year. In the Metro East, where taxes are higher, the average price at the pump was $2.37, compared with $3.91 last year.

Across the country, a gallon of unleaded averaged $2.36. That’s much cheaper than the $3.80 it cost this time last year, but prices are still up about 30 cents a gallon this month, enough to make drivers flinch.

"Uh oh," cab driver Jay Biyani said while filling up this week in Manhattan. "That’s the first thing I say when I pull into this gas station each day. Right now it’s not that bad, but it’s a lot worse than two weeks ago."

Even so, AAA estimates 32.4 million people, or about one in 10 Americans, will travel over the holiday, most of them driving. That’s a slight 1.5 percent increase from 2008.

Vacations make a lot more sense for many families than they did last year. Airfares, hotels and tourist attractions are cheaper this year because of the recession.

Gas is no exception online health insurance quotes. For much of this year, there has been a glut of gasoline in storage around the country, keeping prices low. But gasoline has jumped this month. Refineries are taking in less oil because of the glut in gas, and the cutbacks are showing up at the pump.

The trading markets are at work, too. By mid-February, the price of oil had fallen so far — below $34 a barrel, compared with a peak of $147 last July — that large investors couldn’t resist buying in.

Investing momentum feeds on itself, and government data suggest speculative trades are on the rise, meaning people are buying in simply because they know they can sell for a quick profit.

"Anyone who says speculators are not playing a role in this run is delusional," said Tom Kloza, publisher and oil analyst at the Oil Price Information Service.

The same thing happened last year, to a much greater extent. Because when the Wall Street crisis struck and the economy tanked, oil prices collapsed. Gas fell to $1.61 by the end of the year.

So how high will gas go?

Darin Newsom, senior energy analyst at DTN in Omaha, Neb., said he expects the average price for regular unleaded to push $2.80 a gallon this summer — higher than many other forecasts.

Jeff Tomich of the Post-Dispatch contributed to this report.

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The Obama administration has no plans to push General Motors Corp into bankruptcy next week and the outcome of the automaker’s restructuring efforts may not be known until a June 1 deadline, a source familiar with the situation said early on Friday.

Earlier, the Washington Post, citing sources familiar with the discussions, reported that the Treasury Department would steer GM into bankruptcy next week under a plan that would provide the company just short of $30 billion in new federal loans,

A U.S. Treasury spokeswoman declined to comment.

The Treasury is continuing to work with GM on its restructuring, and while the situation could change, there were no plans for a GM bankruptcy filing next week, the source, who was not authorized to speak publicly about the matter, told Reuters.

The government task force overseeing GM and Chrysler restructuring has given GM until June 1 to restructure its operations and prove it can be viable without government aid or face probable bankruptcy.

On Thursday an Obama administration official said the task force was continuing to work with GM and all of the stakeholders involved.

“I think that in terms of the outlook, I’m not going to speculate on the bankruptcy question, but I will say that the administration is committed … to standing behind GM and is confident that the company will be able to restructure over a short period of time,” the official said.

“GM faces a number of hurdles and it may well be that a court process is necessary to effectuate the restructuring, but the administration is committed to standing by the restructuring process whether or not that occurs,” the official said payday loan cash advance loan.

GM officials could not be immediately reached for comment. While the company has indicated a bankruptcy is probable, there has been no indication from the automaker, its advisors or the government that a filing would occur as early as next week.

GM must still address a number of concerns before any filing, including payments to suppliers, receiving ratification of proposed labor concessions and sorting out a complex proposal with its bondholders to further reduce debt.

If General Motors files for bankruptcy, as widely expected, its healthy assets will be quickly sold to a new company owned by the U.S. government, a source familiar with the situation told Reuters on Tuesday.

The source, who was not cleared to speak with the media and asked not to be identified, said the U.S. government would pay for the assets by assuming the automaker’s $6 billion of secured debt and forgiving the bulk of the $15.4 billion of emergency loans that the U.S. Treasury has provided to GM.

The company on Thursday reached a sweeping deal on concessions with the United Auto Workers and has given its bondholders until next Tuesday to agree to a plan that would reduce the company’s debt.

(Reporting by David Lawder and John Crawley; Writing by JoAnne Allen; Editing by Peter Cooney and Jackie Frank)

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