Chrysler in SERIOUS trouble

[ozpont]

...dispite essentially paying nothing to DaimlerChrysler AG (now Daimler AG) for an 80.1% stake in Chrysler.... now Chrysler LLC  its new parent company Cerberus Capital Management LP  has announced in response to the question of "are we bankrupt"... the company chief's response was "Technically, no. Operationally, yes".

   For a third time in the last 30 years.. this time.. there may be nobody else there to save it....

   This is a big read.. but of interest to many...

Chrysler Faces Financial Pinch, Sees Asset Sales[/size]
By JOSÉE VALCOURT and NEAL E. BOUDETTE
December 21, 2007; Page A1 / WSJ

Chrysler LLC has slipped into a serious financial crunch just four months
after Cerberus Capital Management LP swept in to save the auto maker.
At a meeting earlier this month, Chief Executive Robert Nardelli told employees the company is headed for a substantial loss this year and is
scrambling to sell assets to raise cash, according to an account by two
people present that Mr. Nardelli confirmed.
"Someone asked me, 'Are we bankrupt?'" Mr. Nardelli said at the meeting. ....."Technically, no. Operationally, yes. The only thing that keeps us from going into bankruptcy is the $10 billion investors entrusted us with."

In an interview yesterday, Mr. Nardelli acknowledged making the comment, saying it was intended to "convey a sense of urgency" among employees.
   Cerberus is often viewed as among the shrewdest of the private-equity groups reshaping America's industrial landscape. But the Chrysler acquisition is turning into a case study of how deals made during the recently ended boom are going sour.

    Cerberus's secretive chief, Stephen Feinberg, essentially paid nothing to DaimlerChrysler AG (now Daimler AG) for an 80.1% stake in Chrysler. He agreed to put $5 billion into Chrysler, and $1 billion into its financing unit. Cerberus secured $10 billion from investors to pull off the deal. Mr. Feinberg's goal was to spiff up the company and sell it or list its shares for a huge profit -- a feat Cerberus had pulled off many times before.
    Mr. Feinberg put Mr. Nardelli at the wheel, giving the former Home Depot Inc. chief a chance to redeem his reputation after he left the retailer in January under a hail of criticism over his hefty pay and heavy-handed style.
   He learned that Chrysler badly lags behind on fuel-saving technologies and will have to spend
billions to catch up. Worse, the mortgage crisis and slowing economy mean U.S. auto sales are likely to fall next year to their lowest level in 10
years.
    In an interview yesterday, Mr. Nardelli declined to give a forecast for 2008, saying only that he thinks Chrysler "will make a pretty significant improvement" over the $1.6 billion the company will lose this year.
      In his talk with a group of engineers, Mr. Nardelli said the company will  move "very aggressively" to dispose of about $1 billion in land, old plants and other assets, even if it has to sell them below book value.

   He noted that publicly owned companies hesitate to do that because they would have to
charge the book loss against their earnings. But in a private company, "cash
is king," Mr. Nardelli has told colleagues.
    He told the engineers, "We need to generate cash to  keep this machinerunning."