Date posted: 05-05-2009
AUBURN HILLS, Michigan — An in-depth look at Chrysler's bankruptcy filing documents indicates that the Viper brand may not survive beyond next year.
The documents split Chrysler's assets and liabilities into two groups, those belonging to "OldCo" or the old company and New Chrysler, the entity that Italian automaker Fiat would assume.
"The major assets remaining in OldCo would include eight manufacturing facilities, and related machinery and equipment, with a book value of $2.3 billion," according to the declaration of Robert Manzo, which was part of Chrysler's first-day motions. "The [Section] 363 balance sheet analysis anticipates that certain plant and facility assets would be left behind in OldCo and closed by 2010."
The document says OldCo assets and liabilities include the following: Chrysler's Sterling Heights assembly plant, St. Louis North, St. Louis South, Conner, Newark, Twinsburg, Kenosha and Detroit Axle. The Conner plant, located in Detroit, builds the Viper products with about 115 workers.
Robert Manzo is the executive director of Capstone Advisory Group LLC, a financial advisory services firm that says it has expertise in turnaround and crisis management. The firm has been working on-site at Chrysler headquarters since November 2008, according to court documents.
When contacted by Inside Line regarding the fate of Viper in the face of Chrysler's bankruptcy filing, Chrysler spokesman Todd Goyer e-mailed the following statement:
"As previously indicated, Chrysler LLC is evaluating strategic alternatives for the Viper business including the potential sale of the Viper nameplate, Conner Avenue Assembly Plant, and/or associated tooling and resources. During this process Chrysler has been approached by a number of parties interested in purchasing the business.
"Chrysler continues to evaluate these proposals in an effort to maximize the value of the Viper business. No timeline has been established in connection with this process, and Chrysler will not comment on the nature of ongoing discussions or negotiations or confirm the identity of any of the interested parties."
Manzo's declaration also raised red flags about the fate of the Jeep Wrangler
His documents said a liquidation analysis of Chrysler "assumes that certain car lines and the plant assets supporting them will be sold as going-concern enterprises. These lines include Jeep Wrangler, Dodge Viper and Dodge Ram and Dakota truck lines."
But he delves deeply into the case of Jeep Wrangler, raising doubts about its ability to attract a buyer or survive as a stand-alone entity.
"The example of the Jeep Wrangler is instructive," Manzo writes in his affidavit. "A potential buyer would face significant additional investment costs in the range of $550 million to $1 billion.
"These additional costs include in excess of $100 million for signage to establish a dealer network, supplier-related costs exceeding $250 million and upwards of another $150 million in associated marketing costs to relaunch the car line. There are likely other significant costs that a potential buyer would have to incur in order to re-establish the brand. In addition, recent market experience reflected in the efforts to sell Saturn, Opel, Saab and Hummer brands indicates an extremely depressed market for stand-alone automotive brands."
Manzo's declaration was part of thousands of pages of documents filed in regard to the Chrysler bankruptcy.
Article Link:IL Exclusive: Viper Brand Faces an Uncertain Future, According to Chrysler Bankruptcy Documents