Chrysler Says $5 Billion In Low-Interest Loans Will Be Enough
March 14 2009 - 8:38PM
Dow Jones News
Chrysler LLC won't need additional federal funding to run its
operations if it succeeds in securing $5 billion in low-interest
loans by the end of the month.
The $5 billion will help Chrysler work through the crucial July
shutdown period when U.S. auto makers traditionally idle their
plants for up to two weeks to retool their factories, a company
spokeswoman said.
The Associated Press reported earlier Saturday that Chrysler
Chief Financial Officer Ron Kolka said Chrysler would need
additional government loans or face a cash shortage in July. Kolka,
Chrysler said, was explaining when the next large cash usage would
occur.
Chrysler, which has already received $4 billion in low-interest
loans, told the U.S. Department of Treasury in February that it
needed only another $5 billion in order to avoid bankruptcy. The
auto maker is slated to submit a plan on March 31 that details its
cost-cutting actions and how it intends to repay the loans.
Chrysler and General Motors Corp. (GM), which also needs more
low-interest loan money, are both in cost-concession negotiations
with the United Auto Workers. The UAW ratified an agreement with
Ford Motor Co. (F) - which hasn't accessed the loans - is expected
to save the auto maker $500 million annually.
Kolka told the Associated Press that Chrysler's will succeed at
reaching a deal with the UAW that will comply with the terms of the
government loans. The auto maker must lower its hourly labor costs
to close the wage gap with the U.S.-based plants operates by its
Japanese competitors.
-By Jeff Bennett; Dow Jones Newswires; 248-204-5542;
jeff.bennett@dowjones.newswires.com