Bailout Watch 401: Chrysler Requests $5B To Forestall the Inevitable

Justin Berkowitz
by Justin Berkowitz
bailout watch 401 chrysler requests 5b to forestall the inevitable

Chrysler has just released its 177-page “Viability Plan.” It will no doubt take plenty of time to go through (and this, of course, was unintentional on Chrysler’s part). In the interim, some highlights:

—Chrysler wants $5 billion by the end of March for “working capital and other operating expenses.” This would mean a total bailout purse of $9 billion, an increase over the $7 billion requested in December.

—The theme is “pay us now or it’s going to cost you more money than you can possibly imagine— or print.” This sounds suspiciously like like some word I learned once. Axtortion? No. Extourtan? What was it?

—There’s plenty of bankruptcy and liquidation analysis, projecting what the costs would be if they went bust.

—The “Stand Alone” business plan includes a $600 million profit in 2010, followed by a loss of the same amount in 2011, then another loss of $600 million in 2012, then a break-even year in 2013, followed by a projected $1B in profits in 2014.

—24 product launches in 48 months. I can only assume they are counting different paint colors as individual product launches.

—Fiat could, in theory, take another 20% stake of Chrysler for a majority share of 55%.

—“No American taxpayer money would go to Fiat.” Semantics.

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4 of 45 comments
  • Campisi Campisi on Feb 18, 2009

    Chrysler needs to do whatever it takes for them to be dead and Fiat in the United States by 2010.

  • Kurt. Kurt. on Feb 18, 2009

    Let me ask this question...Is Chrysler in BETTER shape than GM? I ask because Chrysler is only asking for $5Bn while GM is asking for $22Bn. Is Cerebus just asking for the smaller amount becasue it might actually get it and be able to skim some of it before C7, whereas if they asked for a REAL amount (say $22Bn to $50Bn) Obama and company would just through them into C7? And another thing... Since Cerebus owns Chrysler, will they have to fess up the taxpayers loan if they go C7? We know the money to GM will never be returned. Could the govt squeeze Cerebus to repay the loan?

  • SpeedJebus SpeedJebus on Feb 18, 2009

    Ok, hypothetical question: What will cost more: Continued life support for another 5 years, until "sustained profitability", or funding the health care obligations of retirees and the current employees with "X" amount of tenure, for the next say, 10 years? The smoke and mirrors will continue until the government pulls out, and the workers are *still* out of a job. Same end result, why not get a head start?

  • Psarhjinian Psarhjinian on Feb 18, 2009
    Let me ask this question…Is Chrysler in BETTER shape than GM? That's actually a good question, and possibly worth an 'In defense of... Chrysler' by someone who knows more than I do. I think they might be. Chrysler is smaller, which is a good start in a crunched market, and has historically been the most agile of the American makes. With decent oversight (eg, not Cerberus or Daimler) they could probably be salvaged, if not completely reinvented. Forced to go public and brought under the auspices of Magna or Fiat, they might do well. You'd have to pry them out from under Cerberus' thumb, though, which would be hard. GM, by comparison, could be considered too big to succeed. The management is perenially sick, and it shows no signs of wanting to get better. There's some technical brilliance, but the management is aggressively incompetent. You could make the case that GM ought to be dissected and the parts that aren't too ridden with gangrene parcelled out to healthy competitors.