Chrysler says needs emergency bridge loan
DETROIT (Reuters) - Chrysler LLC on Tuesday asked the U.S. government for an emergency $7-billion bridge loan by the end of the year, saying it needs the funds to survive a brutal downturn in sales that has depleted its cash reserves.
At the same time, the struggling automaker said it was pushing ahead with a request for $8.5 billion in taxpayer-backed loans to make more fuel-efficient vehicles.
Chrysler's business plan was demanded by Congressional leaders who will convene this week to consider Chrysler's request along with similar pleas from General Motors Corp GM.N and Ford Motor Co. (F.N).
Chrysler's plan was detailed in a text prepared for Chief Executive Bob Nardelli's planned testimony before Congress later this week.
Chrysler, which ruled out bankruptcy as an option, said its owner Cerberus Capital Management will work with the government to provide collateral and to secure taxpayer funding.
Chrysler, which was bought by Cerberus in August 2007, estimates that it will have about $2.5 billion cash at the end of the year. The company said it expects to have expenses of $11.6 billion, including $8 billion to parts suppliers, during the first quarter.
Without the federal bridge loan, Chrysler said it's cash could fall below minimum cash needed to operate in the first quarter of 2009.
Chrysler, supported by Cerberus, will work with the government to provide warrants, common or preferred stock or other equity, the company said.
The company would be well positioned to repay the loans beginning in 2012, the document said.
Chrysler, GM and Ford are now requesting a total of up to $34 billion in government credit.
The three automakers had a Tuesday deadline for submitting detailed plans to congressional leaders outlining restructuring efforts and their prospects for survival in order to secure emergency funding.
Chrysler said it remained focused on developing partnerships and alliances and sees annual synergies of $3.5 billion to $9 billion from alliances with other automakers.
The company has a pending request for $8.5 billion in loans from the Department of Energy in order to retool factories and take other steps to meet federal requirements for a 40 percent increase in fleetwide fuel economy by 2020.
Funding for those loans was authorized under a $25 billion loan program approved by Congress and signed by President George W. Bush in late September.
Chrysler said it was counting on receiving $6 billion of that low-cost funding from the Department of Energy and had factored the loans into its business plan running until 2012.
(Reporting by Poornima Gupta; Editing by Bernard Orr)
