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January 20th, 2009

American Co’s Seek Aid Outside Borders



This week alone two American companies sought aid from sources outside the U.S. On Monday the NY Times received $250 million in financing from companies controlled by Mexican billionaire Carlos Slim Helu. According to the Times, the money will be used to refinance their mounting debt. At a time when print media is growing more obsolete, industry leaders like the Times are forced to focus on digital and global expansion to stay a leader in the pack:

“We believe that with the strength of The New York Times brand, its national and international reach, its potential for digital expansion and most of all, its world-class news and information, the company will continue to be a leader in the media industry,” [said Arturo Elias, director of Inmobiliaria Carso, the company that "holds 6.9% of the Times company's Class A shares."]

Meanwhile, Italian automaker Fiat agreed to take a 35% stake in Chrysler, but at the moment, has no plans of injecting any cash into the struggling American company. The “collaboration,” which is estimated to have a cost savings of $3-$4 billion, provides access for each company into foreign markets. While Fiat benefits from expanding its global reach, Chrysler’s introduction to the European market will allow the automaker to produce smaller, more fuel-efficient vehicles for a marketplace in which they are already in high demand.

Significant shifts in the operating structures of both the news and auto industries have led these companies to seek viable private-market support outside the U.S. in order to ensure long-term viability. While it’s not unusual for domestic companies to seek foreign aid, similar financing wasn’t available at reasonable terms and conditions in this country.

It’s encouraging that American companies and industries are looking beyond government assistance as a means of financial survival.

Are these moves enough to ensure the long-term survival of two industry leaders undergoing hard times?

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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