Financially troubled American Motors Corp. today reported a $52 million loss for the second quarter and proposed a financial restructuring to raise cash.
AMC said it would sell publicly 8 million shares of convertible preferred stock to raise $187 million. A company statement disclosed that some of the cash might be needed to keep AMC's vital vehicle development programs on track.
It would be the first time that any AMC preferred stock has been in public hands since 1979, when the French auto maker Renault bought into AMC, the company said.
Renault's 46.1 percent common-stock ownership, through which it controls AMC, would be unchanged, an AMC spokesman said.
However, because the preferred stock offering would change Renault's total holdings, stockholder approval is required. AMC scheduled a special meeting for Aug. 13.
Losses for the first half of this year were $71 million, nearly twice analysts' estimates of $40 million. But they were lower than the $99.4 million loss during the first half of 1985, which included the considerable costs of layoffs and firings that were part of a 25 percent cut in internal budgets in the spring of 1985.
AMC reported $801 million in second-quarter sales, down almost 17 percent from $961 million in the year-ago period. Six-month sales declined to $1.7 billion from $1.9 billion.
The second-quarter loss per share was 50 cents, AMC said, compared with 66 cents a year ago.
From 1979 through 1985, AMC lost $747 million.
A written statement from AMC President Joseph Cappy cited the austerity program in explaining how the company could cut losses while selling fewer cars and suffering a 17 percent decline in revenue.
"At the same time, however, we have been forced to expand costly incentives to match competition in the marketplace," Cappy said, without saying how much it cost AMC to offer cut-rate financing and rebates on its already hard-to-sell cars.
Sales of U.S.-made AMC cars -- the subcompact Renault Alliance and Encore and a small amount of compact Eagle four-wheel-drive models -- were down more than 44 percent so far this year compared with a year ago.
However, sales of Jeep vehicles, which carry a much higher profit, were up 19.4 percent in the first half of the year, a record rate for Jeeps.
Jeeps now account for 73 percent of AMC's total domestic vehicle sales compared with 55 percent at this point a year ago.
Donald DeScenza, an automotive industry analyst at Nomura Securities Inc. in New York, said the AMC balance sheet "is a trend in the right direction. It's still a big loss, but things are getting better."
A source close to the stock plan, who declined to be identified, said convertible preferred was picked "because it carries a high dividend to compensate for the risk involved." He said AMC's product plans have cost more than originally expected.
However, DeScenza pointed out that Renault alone bought previous preferred offerings.
"I wouldn't be surprised if it's Renault that buys this stock because I don't think anyone else would. They're deep in red ink," he said. "That's how Renault controls AMC. AMC keeps exchanging control for money."