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May 4, 2009, 3:48 pm

Adviser Sees Profitable Chrysler by 2012

Although Chrysler, the bankrupt automaker, posted a net loss of $16.8 billion on $48.4 billion of revenue last year, an analysis done by its restructuring adviser projected that the revived company should be profitable by 2012.

The analysis, conducted by Robert Manzo of the Capstone Advisory Group, also said profits at Chrysler should reach $3 billion by 2016, assuming certain sales increases and the timely completion of an alliance with the Italian car maker Fiat.

Mr. Manzo also conducted a liquidation analysis of Chrysler and concluded that selling the company’s assets, including its various brands and warehouses, would cost $1.9 billion to $2.7 billion.

The first-lien lenders, which hold claims totaling $6.9 billion, would likely recover 9 percent to 38 percent of their claims, or $654 million to $2.6 billion, according to the analysis.

But because of the complexity of selling Chrysler’s assets, the recoveries would likely be at the “low end of the range,” Mr. Manzo noted in a statement with the Federal Bankruptcy Court that is handling the automaker’s case.

A group of creditors representing about 10 percent of the total amount of first-lien debt, or $680 million, objected on Monday to Chrysler’s sale to Fiat and believe they can recover more of their capital in a liquidation.

Mr. Manzo disagrees, saying in court papers that “based on the alternatives available to the company at this juncture, the Fiat Alliance represents the best opportunity for preserving and maximizing the value of Chrysler’s assets, and will result in a viable going concern with significant earnings potential.”

He also projected that Chrysler would emerge from bankruptcy protection by early July and that it would need $4.1 billion in financing for the nine-week case.

LINK:Adviser Sees Profitable Chrysler by 2012 - DealBook Blog -
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