DETROIT — A potential deal for General Motors Corp. to acquire Chrysler LLC is slowly moving forward, but the transaction is being hampered by an inability to borrow the money needed to make it happen, according to a person involved in the financing discussions.

The person, who requested anonymity because the talks are private, said Monday it could be a couple of weeks before a deal is completed, if it goes that far.

The person also said the federal government may have to contribute money in order to make the deal work, although he was unsure if the government has been approached.

GM has been talking with Chrysler owner Cerberus Capital Management LP for at least a month about acquiring the struggling automaker, as Cerberus tries to exit the auto business and GM seeks Chrysler's cash stockpile of about $11 billion.

If the deal is consummated, GM likely would close factories, lay off thousands of workers and perhaps even close Chrysler's giant Auburn Hills, Mich., headquarters.

To do so, GM likely would need to borrow more money for severance packages and other restructuring costs. But that just isn't available right now for a company with a junk credit rating and liquidity concerns like GM, said John Atkins, a fixed-income analyst at IDEAGlobal.com.

If it could sell bonds, GM, would likely have to pay an excessive interest rate "north of 20 percent," Atkins said. "We're talking about a company that is well down the credit ladder."

Fitch Ratings reduced GM's credit rating one notch to "CCC" last month, and Standard & Poor's Rating Service has placed its "B-" rating of GM under review for possible downgrade. Both ratings are noninvestment, or junk, grade.
Wire service report quoted.
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(I wish I had a little extra dough to buy some GM Stock. I'm betting they come back solid!)

 

I agree about the comeback. They've been around to long, and are just too big to close up shop. Merging and streamlining is just good business. Chisler has been a burden to the auto industry for years. Not that they don't make good vehicles, but being bought and sold several times has hurt it seriously!
GM adding 2 or 3 new lines to it's current lineup couldn't hurt. R & D is SOOO expensive, and the tooling costs are unbelievable (I'm a tool and die moldmaker, I know), ANYTHING that can streamline efficiencies is a good thing. GM is good at using items such as brakes, mirrors, door handles, etc, etc, etc, on multiple platforms. Problem is there are just SO many models that are made, and the economy can only handle so many cars being sold, ie, the death of the production of the Monte Carlo, and the Camaro, and the long delay in the production of the new Camaro. Honestly, without GM's Holden in Australia, I'm not sure how GM can handle some of this development. They need to STREAMLINE and consolidate design and manufacturing facilities.
s haven't helped the situation, either. They have had and still do have their place. But the cold hard fact is that the laborer is seriously overpaid, and over benifited compared to non- workers in plants doing the same type of jobs. Case in point: American Axle. They just went thru a 3 month strike, only to settle for LESS than the original offer that was put on the table before them in the beginning, and then jobs were SLASHED when they DID settle. We vacationed several years ago with the CEO of American Axle Mexico, and after talking with him about the way things were happening (he is/was from Detroit), honestly, I was suprised that they didn't just shut down the 3 plants on strike and move them to Mexico or Brazil. I still see that as something going to happen in the near future.
The sad fact is that the force has priced itself and the big 3 right out of the market. I look for some SERIOUS cuts and slashing, and then lookout world, HERE COMETH THE GENERAL! Stronger and leaner than ever. Look for the old un-automated plants to shut down, and only the most talented in their employ will be working for the General.
My 2 cents.

 

It seems inevitable that GM will take over Chrysler. Only a matter of time perhaps. But a part of me doesn't want to see it happen. And here's my reasons why...

The article I read in the local newspaper yesterday said that the Chrysler execs will DEFINITELY all lose their jobs, and the Chrysler Headquarters would be sold off.

Older plants that have not been re-tooled or upgraded recently would face closure and sold off. Putting thousands out of work all over north america.

Then let's talk redundancies in models.

What do you do with all the lines of pick ups? GMC, Chevy, and Dodge Ram. Do you keep all three? Is there a market for all three. Personally, I think one of them would be eliminated. I think GM would make Chevy a car-only name, and eliminate the Chevy truck. Keeping GMC and Dodge pick-ups. Chrysler's SUV's would be eliminated in favour of GM's SUV line-up.

The Chrysler minivan being the bigger seller, would be kept, and the poor sellingGM minivans would go.

Most of the Chrysler cars would be eliminated. Only the top sellers would be kept. Like the Charger andChallenger for example. This may put the long awaited Camaro back on the chopping block.

Of course Jeep would stay. This is one of the reasons GM is interested in Chrysler inthe first place.

I think it is very possible that GM may eliminate the Saturn name completely.

But that's just my opinion. Comments more than welcome. If you think I'm way off base, let me know.

What do you think would happen to the line-up of vehicles if GM purchased Chrysler?