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Discussion Starter #1
October 28th, 2008

Some major media outlets have reported that the Energy Department is preparing to release $5 billion in low-cost loans to General Motors, to facilitate their takeover of Chrysler. At the same time, <a href=””>Automotive News</a> wrote that “two sources with direct knowledge of the talks” reported that GM and Cerberus have asked the government for a $10 billion “rescue package” to allow GM to take over Chrysler. The government would receive $3 billion worth of preferred stock in the combined automaker, and would contribute $3 billion towards the automakers’ pension funds. A decision from the U.S. Treasury could come this week.

GM’s current capitalization is roughly $3 billion, as the giant company’s stock has fallen from over $40 per share to $6. The American automakers directly employ over 350,000 workers in the United States and are indirectly responsible for another 4 million jobs.

As a condition of the deal, GM/Chrysler would agree to “spare as many jobs as possible.” There has been no word about how this would be enforced or how GM or Cerberus would gain the credibility to make this promise worthwhile.

From our friends over @ allpar
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