S&P: GM – Chrysler Merger Headed for "Strategic Bankruptcy"
“We do not view the potential for any eventual transaction involving GM and Chrysler even in combination with government support, as a panacea for these companies’ credit concerns,” S&P analyst Robert Schulz said in a statement [via CNNMoney]. That’s a bottomless cup of not good. Hence Standard & Poor’s Ratings Service is keeping The General on credit watch for a possible downgrade, from “You Can’t Touch This” to “Toxic.” And the hits keep happening. “Our most fundamental and serious concerns regarding GM and Chrysler remain unchanged: the pressures on liquidity facing both automakers and their auto financing affiliates as a result of the rapid weakening of global auto markets and credit-market turmoil… Massive changes would be essential for any merger. That raises the possibility of a ‘strategic bankruptcy’ by one or more of the companies to carry out those changes.”
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Standard & Poor’s Ratings Service? Are they still in business? Huh, I thought they'd have packed up shop by now...
I think strategic bankruptcy was the plan all along. By merging with Chrysler, GM gets to take one of the players out of the game at the same time.
Although I can see no good coming from a GM/Chrysler merger - when I talk to my friends at GM, they agree - perhaps it is because we think like engineers. That said - who the hell cares about anything that S&P says? This is one of the outfits that gave AAA ratings to packages of 'junk mortgages' which had a huge contribution to the economic meltdown.
Sweet, Cerberus gets its ass saved by the government and then then the workers, dealers and suppliers still get hit with a Chapter 11.