UPDATE 2-GM's Energy Dept loan now contingent on US review

(Adds details on loan, Volt, byline)
By Jui Chakravorty Das
NEW YORK, April 6 (Reuters) - General Motors Corp's
request for $10.3 billion in loans under a U.S. Department of
Energy program is now contingent on the automaker's 60-day
restructuring review, a top GM executive said on Monday.
"Treasury wants to fully understand what our ultimate
destiny is before giving us that (DOE) loan," GM Vice President
of Research and Development and Strategic Planning Larry Burns
told Reuters on the sidelines of a product briefing on Monday.
The Energy Department program has earmarked about $25
billion in low-cost loans for the auto industry to support
development of fuel-efficient vehicles.
President Barack Obama last week rejected GM's turnaround
plans that were submitted as part of the company's requests for
more than $16 billion in additional federal aid.
GM, which has lost about $82 billion since 2005, has
already received more than $13 billion in federal aid.
Obama ordered GM to accelerate its survival efforts and
brace for possible bankruptcy, saying it had not done enough to
justify the taxpayer money it was seeking.
The White House-appointed autos task force has given GM 60
days to come up with a restructuring plan that cuts costs and
debt levels more deeply than the automaker had planned.
GM's two separate loan requests are now being considered by
the government together as the autos task force tries to figure
out if the automaker can be a viable company, Burns said.
He said the U.S. government has questions about how the
automaker is positioning itself to be more competitive in
'green' technology, such as making more cars and crossovers --
car-based sport-utility vehicles that are roomier than the
typical car and more fuel-efficient than the SUV.
GM has said it would use part of the $10.3 billion in
low-interest government loans to support the development of
three new hybrid vehicles, including two spinoffs from its
electric vehicle, the Chevrolet Volt.
The Volt, which is scheduled to go into production in late
2010, remains one of the most closely watched new GM vehicles.
After years of making gas-guzzling trucks and SUVs that hurt
its image, GM has made the Volt central to its efforts to
reinvent itself in the eyes of consumers.
The government, in response to GM's viability plan and
request for additional emergency funds, has said the Volt would
be too expensive and would need substantial reductions in
manufacturing costs to be commercially viable.
"That is an accurate statement about the Volt, and about
any new technology," Burns said. "The Volt is going to have to
go through a generational process."
Burns said the government is talking to GM to make sure the
automaker has the wherewithal to go through a few generations
of the Volt before it becomes commercially viable.
GM's new chief executive, Fritz Henderson, last week said a
court-supervised restructuring in bankruptcy might be
necessary.
Contingency plans for a GM bankruptcy developed by advisers
would split the automaker into its more promising assets --
such as electric car technology -- while keeping lower-margin
and loss-making operations under court-protection, a person
with knowledge of the matter has said.
(Reporting by Jui Chakravorty Das, editing by Maureen Bavdek,
Gary Hill)
((jui.chakravorty@reuters.com; 313-967-1900))
Keywords: GM/LOANS

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