Chrysler on C11: "We Are Categorically Denying This"

by Robert Farago

June 27th, 2008 7:27 PM

chrysler on c11 we are categorically denying this

Chrysler spokeswoman Shawn Morgan wants the world to know that her employer isn't going to file for bankruptcy. "This rumor is false and without merit whatsoever." Rumor? More like thoughtful analysis, after ChryCo drew down a $2b line of credit ($1.5b from 20 percent owner Daimler and $500m from 80 percent private equity owners Cerberus). This a couple of weeks before their company-wide "summer vacation." And Fitch Ratings dropped the ailing American automaker to B- with a negative outlook (more bad juju to come). Meanwhile, it was deja vu all over again for former Chrysler rescuer Lee Iaccoca. Lee addressed the troops today, bringing them a message of hope from an earlier, equally fraught time. "Automobiles in America are still a vital business," he said, seated on a stage next to current chairman Bob Nardelli. "We'll live through it. Don't panic. Things are going to be OK." According to The International Herald Tribune , Nardelli gave Iaccoca ironic props. ""Thanks to Lee, we're here today," Nardelli said. As for tomorrow…

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Pch101 on Jun 28, 2008
If they go C11 what happens to Dumbler’s share? The ownership wouldn't necessarily change. It might get diluted if they need to raise more equity to fund a reorganization plan, but every owner would be affected. A line of credit is a form of debt, so it is possible for them to be repaid at least some of what they are owed following a bankruptcy.

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ZoomZoom on Jun 28, 2008

Y'know, years ago, I had a conversation with somebody who was a secretary in a department near me. I had made the comment that a rumor seeded to just a couple of people would spread like wildfire. She didn't believe me, the naive sweetheart that she was. I don't remember if she dared me, or if we made a bet, but I made two or three phone calls, told them to call so-and-so and congratulate her on her pregnancy. I did tell them she wasn't pregnant, but just congratulate her anyway. Because of the cubicle environment, overheard conversations and lunch/elevator/water cooler talk, the rumour DID spread. By the end of the day she was answering her phone with "so-and-so, and no, I'm not pregnant!" Luckily for me, political correctness had not yet stained the landscape. She was very good-natured about it, not mad at all, and my point was made. I hope she is doing well these days. Sometimes, if something is repeated often enough, it becomes very embedded in people's minds, becoming it's own reality of sorts. I don't think that's the case with the auto makers, but it can happen.

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Ktristan on Jun 28, 2008

Reminds me of the weeks before Enron collapsed. Same stuff, same denials: don't worry, we'll get through this, everything's going to be ok...bla bla bla.

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Rudiger on Jun 28, 2008

But she's not unequivocally denying it. Regardless, I think most would agree that it's a foregone conclusion that Chrysler's toast, and a Chapter 11 declaration will be forthcoming sooner rather than later.

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