WASHINGTON – The U.S. government should consider a proposed merger between Chrysler LLC and Italy's Fiat SpA if it is the only way for the distressed Detroit automaker to survive, a senator said on Thursday.
Bob Corker, a Tennessee Republican, said there is little hope that Chrysler could remain a stand-alone company, despite its contention that it could with additional government capital, and those advocating consolidation should realize that a tie-up might involve foreign ownership.
"What is it that can happen out there that creates the highest probability they can pay back (bailout funds)?" Corker asked in an interview with Reuters. "If the merger with Fiat is it, maybe that's something we ought to consider."
The government would have to approve any merger. There have been few details of the proposal, which was announced last month.
Corker said he has met with Fiat representatives to discuss the plan in which Fiat would take a 35 percent stake in Chrysler in exchange for access to technology and overseas markets.
Chrysler is 80 percent-owned by Cerberus Capital Management.
Chrysler submitted restructuring plans with the Obama administration on Tuesday, showing how it would survive as a stand-alone entity.
The automaker also repeated it was pursuing an alliance with Fiat as long as it could be made viable, but provided little detail.
Chrysler sought $5 billion in new government aid in its restructuring plan after receiving $4 billion in bailout funds in December.
Corker also favors congressional hearings on the Chrysler turnaround proposal and a similar one, also submitted on Tuesday, by General Motors Corp. GM is seeking $16.4 billion in government loans on top of $13.4 billion approved in December.
Another Republican and bailout critic, Sen. Richard Shelby of Alabama, said in a statement that the restructuring plans submitted by GM and Chrysler "fall short of providing credible strategies" for long-term viability.
"Instead of taking concrete steps to solve their business problems, GM and Chrysler hope to rely on additional taxpayer funding to avoid bankruptcy," said Shelby, the top Republican in the U.S. Senate Committee on Banking, Housing and Urban Affairs.
A task force led by the White House and Treasury Departments will oversee the restructuring of Chrysler and GM.
Chrysler posted an $8 billion net loss in 2008, according to their restructuring plan.
The plan also projected the automaker would post a $1.1 billion net loss in 2009 considering its operations on a stand-alone basis. That would include a $700 million net loss in the first quarter.
Still, the automaker is contemplating a Fiat alliance that would give Chrysler international access and Fiat access to the North American market.
Chrysler said it expects to simultaneously close deals to seal its alliance and still-pending concession agreements with the United Auto Workers and creditors by March 31.
Chrysler has said a failure to restructure its liabilities and get the $5 billion of additional government funding by the end of March would force an orderly wind-down of operations.
© 2009 Reuters. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters.
|
