An Open Letter From Chrysler’s Bob Nardelli

To Chrysler employees and other stakeholders:

We have received news that U.S. Treasury Secretary Henry Paulson will provide $4 billion of initial funding to Chrysler LLC from the TARP (Troubled Assets Relief Program) as a loan to help bridge the current financial crisis. We appreciate the Administration’s confidence in Chrysler.

As outlined in our submission to Congress, we intend to be accountable for this loan, including meeting the specific requirements set forth by the government, and will continue to implement our plan for long-term viability. The receipt of this loan means Chrysler can continue to pursue its vision to build the fuel-efficient, high-quality cars and trucks people want to buy, will enjoy driving and will want to buy again.

For Chrysler to succeed in its mission to return to profitability, we need the continued support of our many business partners. Terms associated with the bridge loan include Chrysler’s commitment to work with key constituents – including our owners, lenders, suppliers, dealers, management and employees – to identify and achieve the cost-savings concessions we need to build a long-term viable enterprise. These concessions discussions will happen quickly, as a full governmental review and approval of our plan is expected by March 31, 2009.
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Automakers to get $17.4 billion in government aid

WASHINGTON (Reuters) – The government will offer up to $17.4 billion in loans to the ailing U.S. automakers and expects General Motors and Chrysler LLC to access the money immediately, a senior administration official said on Friday. Some $13.4 billion will be made available in December and January from the $700 billion fund that was originally designed to rescue struggling financial institutions, but the loans would be called back if the automakers cannot prove they are viable by March 31, the official said.

Viability would mean that the companies must have a positive net present value, which doesn’t necessarily mean immediate profitability but would require them to reach that point relatively soon, the official said. The three-year loans would require limits on executive compensation and other perks, and the automakers would also have to provide warrants for non-voting stocks.

The remaining $4 billion in aid is contingent on the administration seeking access to the second half of the $700 billion financial rescue plan, known as the Troubled Asset Relief Program, the official said.

(Reporting by Jeremy Pelofsky and Tabassum Zakaria, editing by Eric Beech and Frances Kerry)

GM denies holding new merger talks with Chrysler

NEW YORK (Reuters) – General Motors Corp has not reopened merger talks with Chrysler LLC, a GM spokesman said on Thursday, denying a report in The Wall Street Journal that talks had been revived. “We have had no talks with them since we announced during our third-quarter earnings call that the talks had been suspended,” GM spokesman Tony Cervone said.

Representatives for Chrysler and Cerberus Capital Management, which owns an 80 percent stake in Chrysler, did not return calls seeking comment on the Journal report. GM and Cerberus suspended talks in late October. GM had pushed for up to $10 billion in U.S. government aid to support an acquisition of Chrysler, according to sources with knowledge of the talks. The discussions were dropped when no financing was immediately available.

The Bush administration is considering using funds from the $700 billion financial industry rescue to bail out the Big Three U.S. automakers. A proposed $14 billion bailout collapsed in Congress in the face of opposition from Senate Republicans. Analysts have said GM and Chrysler could face bankruptcy without quick help. GM has said it needs at least $4 billion by the end of December. The chief executives of GM and Chrysler told the Senate Banking Committee during hearings for financial aid earlier this month that they would consider restarting merger talks if needed.

(Reporting by Jui Chakravorty Das; editing by John Wallace)

Chrysler Adjusts Production

Due to the continued lack of consumer credit for the American car buyer and the resulting dramatic impact it has had on overall industry sales in the United States, Chrysler LLC announced that it will make significant adjustments to the production schedules of its manufacturing operations. In doing so, the Company will keep production and dealer inventory aligned with U.S. market demand. In response, the Company confirmed that all Chrysler manufacturing operations will be idled at the end of the shift Friday, Dec. 19, and impacted employees will not return to work any sooner than Monday, Jan. 19, 2009.

Chrysler dealers confirmed to the Company at a recent meeting at its headquarters, that they have many willing buyers for Chrysler, Jeep® and Dodge vehicles but are unable to close the deals, due to lack of financing. The dealers have stated that they have lost an estimated 20 to 25 percent of their volume because of this credit situation.

The Company will continue to monitor the production schedules of its manufacturing operations moving forward.

Auto bailout prospects revived in Senate

By John Crawley and Thomas Ferraro

WASHINGTON (Reuters) – Prospects for an auto industry bailout revived in the U.S. Senate on Thursday as surprise negotiations on a compromise moved forward and a vote was possible later in the day. Senate Majority Leader Harry Reid said on the Senate floor that the deal, if struck, “would overwhelmingly pass” the chamber that just hours ago seemed resigned to sending the automakers back to Detroit empty-handed. The scenario at the core of the possible compromise was proposed by Sen. Bob Corker, a Tennessee Republican, who would grant loans under stricter conditions than favored by Democrats and the White House.

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Bailout plan could soon face House vote

By John Crawley and Thomas Ferraro

WASHINGTON (Reuters) – The U.S. House of Representatives could vote as early as Wednesday on a $15 billion plan to bail out and restructure U.S. automakers but the initiative may face Republican roadblocks in the Senate. The White House and congressional Democrats sought to quickly finalize an agreement in principle struck Tuesday night on conditions for providing $15 billion in low-interest loans to avert a threatened industry collapse if one or more of “The Big Three” U.S. automakers were to fail. But some issues remained unresolved, apparently including a Democratic demand that automakers drop lawsuits against states seeking to reduce tailpipe pollution.

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White House sceptical on final Democrats auto bailout plan

By Thomas Ferraro and John Crawley

WASHINGTON (Reuters) – The White House and Democrats edged toward agreement on Monday to rescue U.S. automakers by extending emergency loans but their plan leaves key restructuring decisions to the incoming Obama administration.

Three days of talks between congressional Democrats and Bush administration officials neared conclusion with a draft bill, obtained by Reuters, outlining temporary low interest loans, terms for repayment and oversight submitted for final White House review.

The final figure was still being worked out with the plan worth between $14 billion and $17 billion. The rescue aims to avert the threatened collapse of General Motors Corp and Chrysler LLC, saving thousands of factory and millions of related jobs in the U.S. recession.

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Bush, Democrats seek to finalize auto bailout

By Thomas Ferraro and Donna Smith

WASHINGTON (Reuters) – White House and congressional negotiators sought on Sunday to resolve remaining differences over an emergency rescue for the struggling auto industry, a stark symbol of the deepening U.S. economic crisis.

Prodded by shock unemployment figures that showed the country shed more than half a million jobs last month alone, negotiators tried to turn into legislation an agreement in principle to provide “The Big Three” U.S. automakers with at least $15 billion in short-term loans.

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