Latest Chrysler Chapter
Owner said to weigh selling Chrysler in pieces
Wednesday October 22, 10:57 am ET
By Tom Krisher, AP Auto Writer
Person briefed on talks says Chrysler could be sold in pieces to other companies
DETROIT (AP) Chrysler LLC could be sold in pieces to other companies as its majority shareholder Cerberus Capital Management LP seeks to exit the auto business, according to a person briefed on the discussions.
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Cerberus, the New York-based private equity firm, has been shopping the beleaguered automaker to General Motors Corp., the combined Nissan Motor Co. and Renault SA and other companies.
Many combinations are being discussed, said the person who has been briefed on the talks. The person asked not to be identified because the discussions are private.
Chrysler spokeswoman Shawn Morgan and Cerberus spokesman Peter Duda declined to comment.
Cerberus's efforts to exit the automobile industry have been widely reported in recent weeks, though speculation has swirled over what shape the final deal might take.
One deal being discussed reportedly calls for Cerberus to hand over Chrysler to GM in exchange for GM's 49 percent stake in GMAC Financial Services.
GM sold a 51 percent stake in its finance arm to Cerberus in 2006. Cerberus also would get an equity stake in GM, hoping to get a good return should GM recover when U.S. auto sales bounce back from a serious slump.
GM is said to be interested in Chrysler for its cash. Chrysler, whose sales have dropped 25 percent during the first nine months of the year, reportedly has about $11 billion available.
It also has debt, but the amount hasn't been disclosed because Chrysler a private company. Cerberus bought an 80.1 percent stake in Chrysler from Germany's Daimler AG in a $7.4 billion deal last year.
Chrysler's cash may not be enough for GM to take on its money-losing rival, and the federal government may be involved in an effort to inject cash to prop up the deal.
Auto industry analysts said financing for the deal remains a key element to any final deal. Citi Investment Research analyst Itay Michaeli said in a recent report that a combined GM and Chrysler would require at least $10 billion to $12 billion in fresh liquidity.
However, this could pose a problem given the turbulence in the capital markets, Michaeli said, making it "feasible that the government could step in to provide support."
Detroit-based GM is itself burning up cash, going through more than $1 billion per month. Several analysts have predicted it will reach its minimum operating cash level of $14 billion sometime next year.
GM's sales were down 18 percent for the first nine months of this year. The company has lost $57.5 billion in the past 18 months, although much of that comes from noncash tax accounting changes.
AP Auto Writer Dan Strumpf contributed to this report from New York.
Maybe this would be better??? I really hate the wait and see game. AND I still need to save for my 09 before ordereing[:@]