GE plunges to worst weekly loss since recession

NEW YORK: General Electric Co (GE) plummeted again as a report from Deutsche Bank questioned whether the manufacturing behemoth’s latest problems would force it to raise capital by selling shares or further cutting its dividend.

The company is facing a “cash squeeze” and growing debt pressures, particularly after disclosing a substantial charge related to an old insurance business, Deutsche Bank analyst John Inch said in a note.

There is a high probability of “additional unforeseen cash events” that could undermine the lending unit’s already-poor financial position, he said.

“Ongoing liquidity pressures and significant remaining GE Capital risks may make an equity capital raise unavoidable,” he said.

Given the possibility of additional share declines, GE may need to take such action “sooner while its stock is still elevated.”

GE pushed back against the argument. The Boston-based company had no plans to raise new capital and had already taken steps to shore up its cash position, said spokeswoman Jennifer Erickson.

GE, which will report earnings Jan 24, said this week that industrial cashflow for 2017 would be above its earlier estimate.

The company could also reduce its dividend again, Inch said, after cutting the shareholder payout in half in November. — Bloomberg