DETROIT -- Financial woes mounted yesterday for General Motors Corp. as its credit ratings were called into question and it projected that upcoming accounting penalties could technically wipe out its net worth.
Neither development marked a further deterioration of GM's financial condition, but analysts said that the news could hasten more plant closings. Top GM executives say that such steps are already in the works.
Standard & Poor's Corp. placed most of GM's $90 billion debt on its "credit watch with negative implications," signaling that the nation's largest industrial company's credit rating might be downgraded.
That will make it moderately more expensive for GM to borrow money, says Joseph Phillippi, auto analyst at Shearson Lehman Bros.
The rater also downgraded GM's preferred stock ratings to A minus from A, commenting that GM's financial performance this year was"far worse" than predicted when S&P downgraded GM's debt in February. "Of particular concern, losses in North America have reached unprecedented levels," S&P said.
S&P also placed Ford Motor Co.'s long-term debt and preferred stock on a "negative" watch. But S&P said that Ford's balance sheet was in better shape than GM's.
Separately, GM estimated that new accounting standards being imposed in 1993 on all companies will cost it from $16 billion to $24 billion in a non-cash charge against earnings. The higher figure is roughly equivalent to GM's net worth.
GM said that it had not decided when or over how many years to take the charge, which the Federal Accounting Standards Board is requiring in recognition of the obligations companies face for rapidly increasing health costs for retirees. Until now, those costs have been booked as they were paid out.
The change will not affect the company's cash position or income for tax purposes, but it will lower net income on its balance sheet.