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Posted by Will (in IL) on Friday, October 31, 2008 at 08:55:07 :
In Reply to: GM/Chrysler, Interesting Read posted by Paul ( in NY) on Thursday, October 30, 2008 at 21:40:53 :
October 31, 2008
BY JUSTIN HYDE and TIM HIGGINS
FREE PRESS BUSINESS WRITERS
The U.S. Treasury Department, armed with a $700-billion fund to help salvage the economy, is no longer talking to automakers about possible aid, further complicating efforts by General Motors to seek help for a merger with Chrysler, the Free Press was told Thursday.
"The Treasury is not negotiating with automakers," a Bush administration official said late Thursday. It's not known why the Treasury stopped talking, but GM and other automakers are now turning to other parts of the administration for financial assistance.
Chrysler owner Cerberus Capital Management and GM have been in talks for weeks to merge the two automakers, but the deal is being held up by financing. Such a merger likely would lead to 90,000 job losses at Chrysler and suppliers, according to a report released Thursday.
"The biggest problem they have right now is the government's participation. The government does not want to participate on a merger basis," a person briefed on the talks said.
With the current state of GM's troubled finances, the automaker's urgent pursuit of government help presumably would be occurring with or without the specter of a Chrysler deal hanging in the air. GM has been seeking up to $10 billion in aid from federal officials.
GM declined to comment for this report.
"Chrysler as we know it will cease to exist very soon," said Kimberly Rodriguez, principal of Grant Thornton's automotive practice. "At this point, there are very few options available to either company. We believe a transaction between GM and Chrysler is likely because it would be the most expedient way to protect cash and jobs at both companies."
The problem is cash, and both companies appear to be running out.