This doesn't look good.
I don't see any good coming of this as Chrysler has a lot of great technology ready to come to market but some of these major deals like the Phoenix engine program along with the Getrag transmission were some of the industries cutting edge designs(IMO) 2 mode Hybrids are here now, full electric cars are only a year away and look like a production vehicle.
Quotes from Allpar.com
GM, Cerberus want US cash to fund mergerOctober 20th, 2008 by Bill Cawthon
Since General Motors is havng difficulty raising the cash needed for acquisition of Chrysler from Cerberus, Stephen Feinberg, Cerberus’ founder and CEO, has suggested the companies approach the federal government for an investment in the merged automakers.
The deal, which is widely seen by analysts as a potential disaster for both companies, is being pushed by Cerberus, which is reportedly eager to get rid of Chrysler’s automotive operations and get the other 49 percent of GMAC from General Motors. Feinberg believes the ailing finance company will be the beneficiary of the massive federal bailout of the mortgage and financial industry. Cerberus would also retain Chrysler Financial.
General Motors’ CEO Rick Wagoner and members of the GM board are said to be skeptical of the deal which is being internally promoted by Fritz Henderson, GM’s president and COO. For its part, GM wants the reported $11.7 billion in Chrysler’s cash reserves and would like to be rid of GMAC, which has become a drain on its dwindling resources. On the downside, GM, which is already burning through cash at a rate that could leave it without enough money to cover its operating expenses by sometime next year, would have to assume numerous legacy liabilities, including Chrysler’s healthcare and pension obligations and warranty support for Chrysler’s lifetime powertrain warranty. In addition, the merger is likely to be strongly opposed by the UAW which views the deal as a way to obtain further concessions than those granted in the 2007 labor agreements.
Advocates of the merger estimate potential savings of $10 billion but experts believe the costs associated with the merger may overwhelm the combined company before any savings can be realized.
WSJ: GM trying to raise money to buy ChryslerOctober 20th, 2008 by DaveAdmin
The Wall Street Journal reported that General Motors has been trying to get financing to buy Chrysler, but has not yet been able to do so. The goal is reportedly to have a deal closed by November 4; reportedly, up to 40,000 jobs would be cut with total cost savings estimated at $10 billion. J.P. Morgan analysts apparently are including more power over the UAW as one of the cost savings of the deal.
Rumor: Phoenix V6 engine cancelledOctober 19th, 2008 by DaveAdmin
In preparation for the acquisition of or by General Motors, Chrysler appears to have dropped its ongoing construction for building the Phoenix engine family, which would have been a world-class V6 with direct injection, variable valve timing, and multiple displacement systems. No confirmation has been received but a plant which was to make engine components has reportedly been told that the project is no longer going forward.
Late last week, Chrysler suddenly stopped the dual-clutch automatic transmissions project as well, by cancelling its agreement with Getrag. If true, the close proximity of the events suggests that negotiations with General Motors are going well for Cerberus - and very poorly for Chrysler buyers and employees.
Chrysler lawsuit kills efficient dual-clutch transmissionsOctober 19th, 2008 by DaveAdmin
According to Getrag Transmission Manufacturing LLC, Chrysler has canceled the construction of advanced, efficient dual-clutch transmissions by Getrag in Indiana, as of Friday. Chrysler has sued Getrag over its inability to borrow $300 million to pay for tooling; Getrag said it would sue Chrysler for damages and reimbursement for the expense of building the plant, which is fairly advanced in construction and was set to start building the transmissions in 2009.
Getrag issues a press release, which stated, in part:
Chrysler LLC has rejected the financing structure that GETRAG had offered together with its banks, which required Chrysler to secure some of their obligations under the supply agreement, and has elected to terminate the supply agreement and related documents.
GETRAG is astonished by this action and will pursue all rights and remedies under the terms of the supply agreement for, among other things, reimbursement of all expenses incurred by GETRAG and its suppliers in connection with the project.
With respect to the pending lawsuit, GETRAG maintains that Chrysler’s claims are without merit. GETRAG intends to vigorously defend the lawsuit and file counterclaims against Chrysler to recover damages suffered by GETRAG caused by Chrysler’s conduct.
Renault not in discussions with ChryslerOctober 17th, 2008 by Bill Cawthon
French automaker Renault today told Reuters it was not talking to anyone about buying Chrysler’s Jeep Division from Cerberus Capital Management. People familiar with the situation had said the private equity firm was in negotiations to sell the automaker, in whole or in pieces, to Renault or General Motors.
“There are no discussions. We are focusing on dealing with the current market situation,” Renault spokeswoman Frederique Le Greves said. A spokesman for Nissan declined comment on any talks with the Japanese automaker which is 44-percent-owned by Renault.
Renault recently named Patrick Pelata to be its chief operating officer, leaving Carlos Ghosn, CEO of both Renault and Nissan, free to devote more time to strategy, including mergers and acquisitions. Ghosn has, in the past, been open about his desire to have the French-Japanese auto alliance partner with a North American automaker.
Cerberus and GM are pushing for an agreement by the end of October while Cerberus is talking with Daimler AG about acquiring the 19.9 percent of Chrysler it doesn’t already own. Daimler AG has already said it wants no part of a GM-Chrysler merger.
Tough economic conditions are forcing automakers to look at their operations to see where there might be opportunity to raise some much-needed cash. Ford is selling its 33-percent majority stake in Mazda to a group of twenty Japanese companies and General Motors is said to be considering selling its Saab subsidiary. GM has already put its Hummer brand up for sale.
Financial roadblocks in road to Chrysler-GM mergerOctober 17th, 2008 by Bill Cawthon
Cerberus and General Motors Corporation are reported to be in a rush to the altar for their automotive operations but they are encountering issues with who is going to pay for the wedding and how much those payments might be.
Even though bankers like JP Morgan Chase & Co., which is a major player in the finances of both Chrysler and GM, are in favor of a deal, financial markets are not friendly to the amount of cash usually involved in deals this size. Cerberus has said it is willing to kick in some money, it is unclear how much the contribution would be. JP Morgan is already the largest holder of debt generated by Cerberus’ acquisition of Chrysler in August 2007 and that debt is currently trading only at a steep discount. In fact, reluctant investors have left a large portion of the debt still unplaced over a year after the transaction.
Reports from unidentified sources indicate GM has already identified a potential $10 billion in savings from the merger and is eyeing Chrysler’s reported $11 billion-plus cash hoard to buy it time to get to 2010, when new labor contracts allow it to unload its union healthcare obligations and fully implement the new, two-tier pay system for new hires in non-core jobs. One analyst estimates GM’s reserves are about $2 billion short of what it will need to get through 2009.
Cerberus, which is selling off non-core Chrysler assets, is looking to get the 49 percent of GMAC is doesn’t own and is likely to split Chrysler Financial from Chrysler LLC so it can retain Chrysler’s financing arm. Cerberus has also said it wants to retain a stake in Chrysler. Unclear at this time is how Cerberus or General Motors will deal with the 19.9 percent of Chrysler still owned by Daimler AG.
Chrysler CEO Bob Nardelli was on CNBC yesterday and said the steep decline in U.S. auto sales has created an environment for industry consolidation. During the interview, Nardelli said, “It certainly creates an environment for consolidation where you can get synergies of productivity that will allow you to be more competitive, not only here in the U.S. market, but on a global basis.”
While he declined to comment on the negotiations with GM, Nardelli said Chrysler and its parent company have been open about looking for partners and creating alliances. GM CEO Rick Wagoner is said to be pushing a deal but sources close to the talks indicate the GM board is resisting the merger.
Reuters has reported additional scenarios are in play at this time. These include a breakup of Chrysler with some assets going to General Motors and others going to a potential foreign buyer like the Renault-Nissan alliance (it’s conceivable Renault could wind up owning Jeep again). Italian industrial conglomerate Fiat has been cited as another potential buyer. Chrysler might also sell or spin off its Mopar subsidiary as a separate transaction.
