You’ve heard about the possible merger of GM and Chrysler, and their impending bankruptcy by 2009 if no financial action is taken, but what about the other Detroit automaker — how is Ford making due, what does their future hold?
Ford says they can weather the financial storm on their own, without government assistance, without help from a merger: Read the rest of this entry »
Well not exactly. As merger talks continue between GM and Chrysler, the White House has begun to discuss federal-financing avenues for the two automakers — one option could include pulling funds from the allotted $700 billion set aside for rescuing financial institutions. The Treasury Department confirmed this week that no money would be diverted from TARP funds; that money had been designated solely for capital infusions to banks and insurance companies only.
Individuals close to the two automakers claim they have requested approximately $10 billion from the federal government to foster a merger between the two failing automakers. One breakdown sees the government providing $3 billion in exchange for preferred stock, the White House taking over $3 billion in pension obligations (extensive pension obligations for retired autoworkers have gobbled up tremendous amounts of funds from both automakers), and “a credit line that could include U.S. government purchases of commercial paper issued by GM to relieve short-term pressure on liquidity.”
As merger-talks continue between General Motors and Chrysler, analysts are holding strong to the belief that without either a merger or government loan, two of the Big Three could go broke within a year:
“Without external intervention, from consolidation or government assistance, we expect GM to reach its minimum cash position in under 12 months,” Deutsche Bank auto analyst Rod Lache wrote last week. In an interview, Mr. Lache added that Chrysler is also running dangerously low on funds. “We believe Chrysler is in the same position. It’s either August 2009 or December 2009 they run out. Both have a limited runway.”
According to MarketWatch, Citigroup plans on filing a suit in opposition to Wachovia’s newly announced merger with Wells Fargo:
“Wells Fargo’s conduct constitutes tortious interference with the Exclusivity Agreement,” Citi said in a statement. Citigroup demanded that Wachovia and Wells Fargo abandon a $15 billion stock swap deal that was announced earlier in the day. Citi said it “has substantial legal rights regarding Wachovia and this transaction.”
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