* GM gets 60 days to develop more sweeping restructuring
* Chrysler plans "unrealistic or overly optimistic"
* Chrysler gets 30 days to complete revised Fiat tie-up
* GM President, COO Fritz Henderson replaces ousted
(Adds detail, background, byline)
By Kevin Krolicki
WASHINGTON, March 30 The Obama administration
autos task force on Monday rejected the turnaround plans of
General Motors Corp (GM.N) and Chrysler LLC and warned both
could be put through bankruptcy to slash debts.
The announcement by the White House autos panel headed by
former investment banker Steve Rattner marked a stunning
reversal for management at both automakers and for GM investors
and creditors who had bet on a softer line.
"We have unfortunately concluded that neither plan
submitted by either company represents viability and therefore
does not warrant the substantial additional investments that
they requested," said a senior administration official, who
asked not to be named.
Instead of granting GM's request for up to $30 billion in
loans, the administration only pledged to fund GM's operations
for the next 60 days while the top U.S. automaker develops an
even more sweeping restructuring plan under new leadership.
GM CEO Rick Wagoner, who met on Friday with the task force,
was forced out on Sunday at the request of Rattner, an official
said. U.S. officials said plans were also underway to replace
most of GM's directors in the coming months.
Both Wagnoner and GM's board have been criticized for
moving too slowly to take on some of the automaker's underlying
problems that date back decades, including unprofitable brands
such as Hummer and Saab, and a costly surplus of models.
Chrysler, which is controlled by Cerberus Capital
Management [CBS.UL], was given 30 days to complete an alliance
with Italy's Fiat SpA FIA.MI or face a cut-off of its
government funding that could force its liquidation.
The findings of the U.S. autos panel are due to be formally
unveiled later on Monday by U.S. President Barack Obama.
CHRYSLER UNREALISTIC, OVERLY OPTIMISTIC
The autos panel rejected the claim by Cerberus that
Chrysler could be viable on its own, citing its smaller size,
weaker product line-up and declining U.S. market share.
In a written report, the panel said Chrysler's assumptions
under the business plan it had submitted to the U.S. Treasury
were "unrealistic or overly optimistic."
Chrysler had asked for another $5 billion in U.S.
government loans on top of the $4 billion the automaker has
If Chrysler can complete a tie-up with Fiat and cost-saving
deals with creditors and its major union, the Treasury would
consider investing up to another $6 billion, officials said.
In recent negotiations with the task force, Fiat has agreed
to take less than the 35-percent stake in Chrysler the two
companies had negotiated and to keep its stake in the U.S.
automaker below a controlling 50 percent until the new
government loan is paid back, the senior official said.
Meanwhile, GM President and Chief Operating Officer Fritz
Henderson, the architect of the automaker's existing turnaround
plan, will become CEO and work with U.S. officials and outside
advisers in coming up with a "a more aggressive restructuring
plan," officials said.
"We believe our approach to GM is starting with a clean
sheet of paper," the senior official said.
The official said the Obama administration had not ruled
out a structured, quick bankruptcy process for either GM or
Chrysler. Such a process, he said, could shed debt at a time
when GM bondholders and Chrysler's bank have held out against
"Think of it as a quick rinse," the senior official said.
"It would be very, very short. Potentially as little as 30
days. The companies would emerge from the other side very
(Reporting by Kevin Krolicki and John Crawley; Editing by