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Tuesday, November 18, 2008

Nardelli: If pushed into bankruptcy, Chrysler may not emerge

WASHINGTON -- Chrysler LLC CEO Robert Nardelli will tell U.S. lawmakers that, unless the Auburn Hills automaker receives assistance, it could run short of cash to run its operations, according to an advance copy of his remarks.

Even though Chrysler is the smallest of Detroit's Big Three automakers, its failure would have a tremendous impact on the sector, he cautioned in prepared remarks Tuesday to the Senate Banking Committee.

"Given our common supplier base -- at Chrysler, 96 of our top 100 suppliers are common to Ford and GM -- the bankruptcy of any one domestic automaker would place enormous pressure on the supply chain and, consequently, on that company's competitors," he said..

Chrysler needs assistance or it risks collapse.

"We are asking for assistance for one reason: to address the devastating automotive industry recession caused by our nation's financial meltdown, and the current lack of consumer credit, which has resulted in the critical lack of liquidity within our industry," Nardelli said. "Without immediate bridge financing support, Chrysler's liquidity could fall below the level necessary to sustain operations in the ordinary course."

Nardelli said dealers and consumers don't have access to credit, causing a large decline in sales. "At the same time, Chrysler has billions of dollars in cash payment obligations every month to pay wages, to pay suppliers, to fund health care and pensions, all in the range of $4 to $5 billion per month."

If the company were pushed into bankruptcy, Nardelli warned "we cannot be confident that we will be able to successfully emerge from bankruptcy."

"That's why as an industry we are requesting a $25 billion working capitgal bridge to survive this liquidity crisis," he said.

Chrysler's parent Ceberus Capital Management LP "has made it clear that it will forgo any enefit from the upside that would, in part, be created from any government assistance that Chrysler LLC may obtain," Nardelli said. Chrysler is privately held and the company doesn't report its financial results.


LINK: Nardelli: If pushed into bankruptcy, Chrysler may not emerge | The Detroit News | detnews.com
 
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