Chrysler seeks 5 bln dlrs more in govt bailout
Chrysler LLC said it needs another five billion dollars in loans from the US government in order to survive a dramatic collapse in global auto sales.autos Updated: Feb 18, 2009 21:56 IST
Chrysler LLC said on Tuesday it needs another five billion dollars in loans from the US government in order to survive a dramatic collapse in global auto sales.
The troubled automaker insisted, however, that it will be able to repay the four billion dollar loan it has already received and that it is well on the path to achieving long-term viability.
"We believe the requested working capital loan is the least-costly alternative and will help provide an important stimulus to the US economy and deliver positive results for American taxpayers," Chrysler chairman Bob Nardelli said in a statement accompanying a 177 page restructuring plan submitted to the US Treasury.
"An orderly restructuring outside of bankruptcy, together with the completion of our standalone viability plan, enhanced by a strategic alliance with Fiat, is the best option."
Chrysler estimated it would require 24 billion dollars in financing to restructure under bankruptcy protection and warned that its failure could lead to the loss of up to three million US jobs.
"Given the current economic downturn, a failure of Chrysler would be a sever setback for the US economy and hinder efforts to restore confidence and revive growth," Nardelli added.
In addition to major restructuring already announced, Chrysler said it aimed to further reduce fixed costs by 700 million dollars, reduce one shift of manufacturing and cut its workforce by 3,000.
It also would discontinue three vehicle models, reduce production by 100,000 vehicles and sell 300 million dollars of "additional non-earning assets."
The number three automaker, controlled by private equity investors since being spun off from Germany's Daimler, said its viability plan "is conservatively based" and reflects the slump in US auto sales that intensified in 2008.
"Chrysler's viability plan is built around a robust product plan, including 24 launches in 48 months and the introduction of electric vehicles to help meet current federal fuel-economy standards," the statement said.
The plan "demonstrates standalone viability" but says this "could be enhanced through a strategic alliance," referring to an agreement with Italy's Fiat for a broad global alliance giving the European group a stake in Chrysler.
But Chrysler's request for additional funds could be hampered by its recently announced deal with Fiat.
While Chrysler insists that no US taxpayer funds would go to Fiat -- which would acquire an equity stake in Chrysler in exchange for sharing its vehicle platforms and technologies -- several lawmakers have said Chrysler should be allowed to fail.
The final plans from the automakers will serve as a basis for the Treasury's decision, due by March 31, to extend the loans or call them in and allow the US automakers to collapse.
"It is clear that going forward, more will be required from everyone involved -- creditors, suppliers, dealers, labor and auto executives themselves -- to ensure the viability of these companies going forward," White House spokesman Robert Gibbs said in a statement.
Ford, the other "Big Three" carmaker, insists it has sufficient cash reserves to survive the downturn without federal aid, despite a 5.9-billion-dollar loss in the fourth quarter of 2008.