:roflpicard: Touche salesman.
My only thinking is that something is wrong with these companies. Ya filing bankruptcy will help them maybe restructure and rework their plans but look at Ford. They aren’t doing stellar but they haven’t managed to land in as much debt or asked for help from the government.
I just don’t see how even loaning this company money will help anything. Ya, its a loan but what guarantee does it have? Is the GM bailout even going to work?
Please. Like all those democrats will play nice together. We can’t even get 3 of them in a room on the state level to agree on anything. At least you guys all fall in line and go the same way.
And Ford is in just as much debt, they just took out GIANT lines of credit just before the recession, luckily, and are paying private creditors instead of the gov’t. They actually lucked out by needing the money first. By the time GM and chrysler needed to do the same, the credit markets were already frozen and they couldn’t get it.
Holy Fuck! Someone posting in this thread actually knows what they are talking about!!! OMG!!! Is this really NYSPEED?
Lets not trivialize over facts and get back to how GM and Chrysler make crap vehicles that no one wants and how the companies are stoopid for not being able to foresee the largest economic recession in 80 years before it got here and didn’t want to turn these companies around, because we all know how to run an auto company and we could have done it better and straightened things out in like a week if we were running them.
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the government’s providing a debtor-in-posession financing guarantee - for which they get a stake in the company (8%).
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Fiat’s getting a sweet deal - 20% in essence for free, working up to 51% if they pay back all the Federal loans.
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there’s still no way to decide how the court’s going to handle this - the hedge funds that “balked” according to the White House have first-line secured credit - meaning that they nominally hold Chrysler’s assets as collateral for the loan. And these guys are the ones usually paid out first when a company goes Chapter 11. Whether or not that occurs in liquidation vs. reorganization isn’t yet clear.
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there’s no way to see how things will go post-bankruptcy either. As it stands, the major banks holding Chrysler loans are in essence being strong-armed to do write offs, by the fact that they took TARP funds. What new bank will be willing to write a loan for the new Chrysler under those same conditions?
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It’ll take Fiat at least 18 months to federalize the small cars it’s willing to provide. There’s no way to know what the market will look like over that period of time. Heck, Chrysler burned through ~$6 billion getting to this point from last year. It doesn’t have to service it’s debt now, but it still has supplier contracts, unemployment/salaries and other operating costs still. And the question of what dealers to bring along and how to support them are still out there. Whether or not this Chapter 11 becomes Chapter 7 isn’t yet clear - and now it’s out of Obama’s hands (and in the court’s, really). If the market continues to tank (or just shuns Chrysler cars), then there’ll be no way out but Chapter 7. And besides, as nice as the 500 might be, there’s no way they’ll sell enough of them to pay for Chrysler’s ongoing obligations.
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even if it came to a Chrysler Chapter 7, we taxpayers will still be out a lot even if the loans got paid back from the fire-sale. The UAW’s 55% stake will become worthless, and all the burden of retiree pension and healthcare will now become Federal obligations. So no matter what, it’s a lose-lose situation for the US.
In any case, what happens over the next month might greatly impact what the Feds decide re:GM - the bigger problem, IMHO. I’m sure Obama’s team will be looking into what’s covered by GM’s unsecured debt, and whether or not it has leverage on these folks too. Then again, they may have CDS coverage via AIG and could give the government the finger about that (pay me now or pay me later…). Of course, the government could just strong-arm a response - but that probably bodes ill for contract law in the US.
In the end, it’s a bad scene for business in general if the way the government is currently handling business contracts in the name of political expediency becomes the way of doing business in the future. I mean, who would want to do any big deals/loans/etc. if the next administration is perfectly willing to take your rights under the law away?
http://finance.yahoo.com/banking-budgeting/article/107013/Cars-That-Wrecked-Chrysler
I think that explains it pretty well :gotme:
They’re line of car just isn’t anything special…
FIAT when I was a kid…
Feeble Italian Attempt at Transportation
Fix It Again Tony
Drama: I had an Italian sports car in '94. They’re a delight.
Turtle: You had a Fiat, Drama
Drama: Italian none-the-less