Chrysler CEO: We're 'operationally' bankrupt

Discussion in 'Stocks' started by crgarcia, Dec 21, 2007.

  1. Chrysler CEO: We're 'operationally' bankrupt

    Automaker scrambling to sell assets just months after private equity buyout as credit crunch deepens - report

    December 21 2007: 7:26 AM EST

    NEW YORK ( -- Chrysler Corp., the troubled automaker bought by private equity just four months ago, is scrambling to sell assets amid indications of huge losses, as access to cash becomes increasingly scarce, according to a published report Friday.

    "Someone asked me, 'Are we bankrupt?'" the Wall Street Journal quoted Chrysler boss Robert Nardelli telling employees at a meeting earlier this month. "Technically, no. Operationally, yes. The only thing that keeps us from going into bankruptcy is the $10 billion investors entrusted us with."

    To raise money, Chrysler is looking to sell over $1 billion in land, old factories, and other holdings, even if it has to let those properties go for under book value, the Journal said.

    In an interview with the Journal, Nardelli confirmed the comments and declined to give a financial forecast for 2008, saying only that Chrysler "will make a pretty significant improvement" over the $1.6 billion the company is set to lose this year. The Journal said Nardelli originally hoped to turn a profit in 2008.

    The rush to raise capital comes amid constricting access to money as more banks and other lenders face heavy losses related to subprime mortgages.

    Chrysler's owner, Cerberus Capital Management, is now facing serious subprime-related losses from GMAC Financial Services, which it bought from General Motors (GM, Fortune 500) for $12 billion, and is also trying to walk away from a now pricey deal to buy United Rentals Inc., (URI) the Journal said.

    Cerberus bought Chrysler from German automaker Daimler in a deal that closed in August.

    In the arrangement, Daimler (DAI) essentially paid Cerberus to take the automaker, which fell to No. 4 in U.S. sales behind Toyota Motor (TM) in 2006, in an effort to get out from under a $1.5 billion loss from last year, along with continued obligations to union members and retirees.
  2. Now they deny it:

    Chrysler: Hitting Its Financial Targets

    Chrysler Says Report of Financial Difficulties Is Inaccurate

    December 21, 2007: 10:36 PM EST

    NEW YORK (Associated Press) - Chrysler LLC denied a published report Friday saying it is in a serious financial crunch.

    The Wall Street Journal reported Friday that Chrysler is in financial trouble just four months after Cerberus Capital Management LP acquired an 80.1-percent stake in the automaker.

    The report was based in part on statements Chief Executive Robert Nardelli made during a meeting with company employees in early December.

    "Someone asked me, 'Are we bankrupt?'" Nardelli told the group, according to what two people who were present at the meeting told the paper. "Technically, no, operationally, yes. The only thing that keeps us from going into bankruptcy is the $10 billion investors entrusted us with."

    Nardelli acknowledged making the comments in a Thursday interview with the Journal. He also said he meant to foster a "sense of urgency" among employees of a company that expects to lose $1.6 billion this year.

    Chrysler issued a statement Friday evening in response to media reports "that have painted an inaccurate picture of Chrysler LLC's current financial position."

    "First and foremost, it is important to note that Chrysler is not only meeting, but, in many cases, exceeding its financial targets heading into 2008," the statement said. "Importantly, Chrysler has ample liquidity. We are fully funded with working capital to meet our present and future needs and objectives."

    In the interview with the Journal, Nardelli declined to predict how Chrysler would fare financially in 2008, saying only that he thinks the automaker will show "a pretty significant improvement" over this year.

    The Cerberus board of directors praised Chrysler's progress to date and unanimously approved its 2008 plan during a 13-hour meeting this week, Chrysler said in the statement.

    "We are on target and have the unwavering support of Cerberus, as well as our other key partner, Daimler AG," the statement said.

    Since its sale to Cerberus, Chrysler no longer has to report its earnings. If it loses money this year, it would be the second straight year of red ink. Chrysler lost $618 million in 2006, but made $1.8 billion in 2005.

    Chrysler in November announced plans to cut up to 12,000 jobs, just after employees represented by the United Auto Workers ratified a new four-year contract with the company. The cuts include 8,500 to 10,000 hourly jobs and 2,100 salaried jobs through 2008, or about 15 percent of the company's work force. The cuts came on top of 13,000 Chrysler job reductions that were announced in February.

    Nardelli said Thursday that sales are meeting the company's targets and that Chrysler's plans for a two-week shutdown of its minivan plant in Windsor, Ontario, were based in part on projections for an even slower 2008.
  3. MMMMMMMm which version do I believe?

    Instead of pissing away billions on pieces of shit nobody wants and of dubious quality, why not take a few billiion, hire some of the minds from Toyota and Honda? They've probably already made their life - nut, would look forward to the challenge, and could pull a JackByrne Geico/Firemen's Fund coup by taking stock and making gazillions.

    this is absolute silliness, going on, from say, 1968. sheese. enough already.