(Adds comments from Chrysler CEO, U.S. Treasury, background on
GM, comment from Nardelli letter)
NEW YORK Jan 2 Chrysler LLC on Friday received
an initial $4 billion emergency loan from the U.S. government,
two days after the government completed a parallel payout to
its larger rival General Motors Corp. (GM.N)
"This initial loan will allow the company to continue an
orderly restructuring," Chrysler Chief Executive Bob Nardelli
said in a statement.
U.S. Treasury Department spokeswoman Brookly McLaughlin
confirmed that the government had sent the $4 billion in funds
to Chrysler on Friday.
General Motors Corp (GM.N) received $4 billion in emergency
loans on Wednesday. Both Chrysler and GM have said they need
the infusion of government cash to meet payouts to suppliers at
a time when a plunge in auto sales has drained their cash
Officials have not spelled out why the loan to GM and a
separate $6 billion funding for its affiliated finance firm
GMAC were completed ahead of the Chrysler transaction.
In an email to employees, Nardelli suggested that the
complexity of the deals had delayed the first payout to
Chrysler, which had been expected to be completed before the
end of the year.
"The Treasury Department has been working to complete the
multiple, complex financial arrangements quickly and
sequentially. The magnitude of these discussions was
significant," Nardelli said.
When major automakers release results on Monday, December
auto sales are expected to show that industry-wide sales fell
to the lowest full-year level since 1992.
Under terms of the government bailout, Chrysler and GM will
have to submit restructuring plans by mid-February and
demonstrate that they are viable by the end of March.
Chrysler is controlled by Cerberus Capital Management
[CBS.UL], and as the only privately held of the Detroit-based
automakers it faced the most scrutiny in congressional hearings
on the proposed bailout for the industry.
Cerberus also owns 51 percent of GMAC.
The Bush administration approved a $17.4 billion bailout
for the auto operations of GM and Chrysler in December.
Of that total, GM has been promised another $9.4 billion in
government loans under that program in addition to the $4
billion payment made on Wednesday. The final $4 billion of the
bailout approved for GM will require Congress to approve the
Chrysler was given $4 billion by the U.S. government after
asking for $7 billon.
The bailout represents the second U.S. government rescue of
Chrysler in 28 years.
Rival Ford Motor Co (F.N) has not sought government loans
but has asked for a $9 billion line of credit it could tap if
business conditions worsen beyond its projections.
(Reporting by Nick Zieminski and Kevin Krolicki; Editing by
Tim Dobbyn, Andre Grenon, Gary Hill)