Bailout Watch 123: GM Seeks Federal Bucks for Chrysler Merger
As Ken Elias points out in his latest General Motors Death Watch, GM is asking the feds for money to fund their merger (now buyout?) plans for Chrysler. The Wall Street Journal [sub] tells the tale, highlight analyst Ron Lache’s “come to Jesus” moment re: the automakers’ cash conflagration. “”Without external intervention, from consolidation or government assistance, we expect GM to reach its minimum cash position in under 12 months,” Deutsche Bank auto analyst Rod Lache wrote last week. In an interview, Mr. Lache added that Chrysler is also running dangerously low on funds. “We believe Chrysler is in the same position. It’s either August 2009 or December 2009 they run out. Both have a limited runway.” OK, so, now, bring on the anonymous source! “GM and Chrysler ‘are basically waiting on the government,’ said one person involved in the merger talks. ‘The three choices are bankruptcy, a big intervention from the government or some big deal like this that has massive cost-cutting possibilities,’ this person said. ‘That’s it. And even the big deal may require government help.'” Or… the feds could do nothing. You know, theoretically. But wait! It gets worse!
“People familiar with the GM-Chrysler talks said over the weekend that the sides are also considering forming a new company that could include a third auto maker.” C’mon! You’re kidding, right? Any guesses who this third sucker party might be? If it’s Ford, well, that would be spectacular! Anyway, if you loved watching Senator Chris Dodd giving bankers shit for the fact he failed to regulate them (and accepted a bribe), then you’ll love this…
“Last week, Michigan Gov. Jennifer Granholm began assembling a task force of cabinet officials who will build a contingency plan in the event of a merger, or if one of the Big Three seeks bankruptcy-court protection. A spokeswoman for Gov. Granholm said Sunday that the task force is talking to industry analysts and Michigan economic planners to develop a plan to deal with what could be massive job loss.”
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