UPDATE 1-US Treasury granted $500 mln in Chrysler funding

(Adds details warranties, Chrysler Financial loan)
WASHINGTON, May 1 (Reuters) - The U.S. Treasury Department
granted Chrysler LLC $500 million in working capital on
Wednesday but the loan has not been drawn down due to the
automaker's bankruptcy filing, a Treasury spokeswoman said on
Friday.
The working capital, which had been in the pipeline for a
number of weeks, is not expected to be used during Chrysler's
reorganization, Treasury spokeswoman Jenni Engebretsen said.
Instead, Chrysler will draw down on $3.3 billion in
debtor-in-posession financing provided by the Treasury when the
company filed for Chapter 11 protection on Thursday.
The loan for Chrysler followed a by a week a similar $2
billion working capital loan for General Motors Corp. ,
which faces a June 1 deadline to reach a restructuring plan.
In addition, the Treasury said it has set aside $280.13
million to backstop warranties on Chrysler vehicles. This
reserve also is not expected to be drawn upon, Engebretsen
said, as Chrysler will continue to fund its warranty costs out
of debtor financing and normal operations.
A $1.5 billion loan provided by the Treasury in January to
Chrysler Financial will remain in place despite the takeover of
Chrysler's Financial's business by GMAC LLC. Those funds have
already been loaned to Chrysler vehicle buyers, and as they are
repaid, the money will be returned to the Treasury, Engebretsen
said.
(Reporting by David Lawder)
((david.lawder@thomsonreuters.com; +1 202 898 8395; Reuters
Messaging: david.lawder.reuters.com@reuters.net))
Keywords: AUTOS/CHRYSLER TREASURY

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