Chrysler Almost Out Of Cash. Again. Still.
The Freep reports that Chrysler’s cash reserves will fall well below the $2.5 billion the firm needs to survive sometime in March. Based on a liquidation analysis in Chrysler’s latest viability plan, Auburn Hills will be down to $1.3 billion by the first of April. According to the same analysis, Chrysler would need $25 billion in Debtor-In-Posession (DIP) financing to survive through Chapter 11 reorganization, a process the firm expects to last two years. And if the private sector won’t provide it (it won’t) and the government won’t cough up DIP financing or more loans (it shouldn’t), Chrysler will begin to liquidate its assets in April. After all, why should Cerberus lift a damn finger? But if liquidation does occur, Chrysler would dump $2 billion in pensions and $20 billion in health care obligations on the government, not to mention defaulting on the loans it currently owes the government. Meanwhile . . .
Moody’s has downgraded ChryCo guardian angel Fiat’s credit ratings into junk territory. According to the credit ratings firm the downgrade “reflects the significantly negative free cash flow in FY2008 leading to a material deterioration in Fiat’s financial flexibility with reported net industrial debt deterioration of €6.3 billion to €5.9 billion.” Oh yeah, and GM has announced that it will (finally) announce 2008 full-year financial results on Thursday morning. There won’t be much to enjoy anywhere in that mess, but as with Chrysler, the cash-on-hand and burn rates will be especially important.
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OldandSlow: I contradict that. It isn't that they are overtly bloated (ala GM), Chrysler's main downfall is that their products suck. If Chrysler's products today were as good as their products in the late 90s, they wouldn't be in this mess.
Anyone with a buyout option at Chrysler should grab it and run. My company is currently is currently in Chap 11. After they filed, they announced that when we get cut (massive cuts soon) we get nothing. No severance packages, no termination pay nothing. You get that days pay and a boot out the door. If there is a buyout option, make sure the payout is soon and take a lump sum over ongoing payments. People who were previously let go with staggered severance benefits were cut off the moment we filed for creditor protection. They can now get in line as a creditor for their lost severance, but they will never see a penny.
"No_Slushbox" is right. I don't know where that health care number came from. But unless there is something weird going on, the taxpayers are not on the hook for the medical care any workers above and beyond what is offered by Medicare. Regarding the PBGC, on paper they are currently overdrawn. But unless there is a run a PBGC assets, they still have enough money to keep going and hope their investments recover and close the unrealized liability gap they currently have. The reason for this is that the pensions they insure have had their investments pummeled. Pensions that used to be fully funded are now underfunded. PBGC is liable for that gap. But that liability is not realized until PBGC takes over because of abandonment or fraud.
What has Nardelli done so far at Chrysler. I mean really you could put a cutout of yogi bear at his desk and it would not make any difference.