Chrysler "operationally" bankrupt

Huntyeraws · **Posted:** Fri Dec 21, 2007 10:29 am

http://money.cnn.com/2007/12/21/news...ion=2007122107

Chrysler CEO: We're 'operationally' bankrupt
Automaker scrambling to sell assets just months after private equity buyout as credit crunch deepens - report
December 21 2007: 7:26 AM EST

NEW YORK (CNNMoney.com) -- Chrysler Corp., the troubled automaker bought by private equity just four months ago, is scrambling to sell assets amid indications of huge losses, as access to cash becomes increasingly scarce, according to a published report Friday.

"Someone asked me, 'Are we bankrupt?'" the Wall Street Journal quoted Chrysler boss Robert Nardelli telling employees at a meeting earlier this month. "Technically, no. Operationally, yes. The only thing that keeps us from going into bankruptcy is the $10 billion investors entrusted us with."

To raise money, Chrysler is looking to sell over $1 billion in land, old factories, and other holdings, even if it has to let those properties go for under book value, the Journal said.

In an interview with the Journal, Nardelli confirmed the comments and declined to give a financial forecast for 2008, saying only that Chrysler "will make a pretty significant improvement" over the $1.6 billion the company is set to lose this year. The Journal said Nardelli originally hoped to turn a profit in 2008.

The rush to raise capital comes amid constricting access to money as more banks and other lenders face heavy losses related to subprime mortgages.

Chrysler's owner, Cerberus Capital Management, is now facing serious subprime-related losses from GMAC Financial Services, which it bought from General Motors (GM, Fortune 500) for $12 billion, and is also trying to walk away from a now pricey deal to buy United Rentals Inc., (URI) the Journal said.

Cerberus bought Chrysler from German automaker Daimler in a deal that closed in August.

In the arrangement, Daimler (DAI) essentially paid Cerberus to take the automaker, which fell to No. 4 in U.S. sales behind Toyota Motor (TM) in 2006, in an effort to get out from under a $1.5 billion loss from last year, along with continued obligations to union members and retirees.

chefdab · **Posted:** Fri Dec 21, 2007 1:08 pm

Maybe this should go in the general discussion section.

tommudd · **Posted:** Fri Dec 21, 2007 1:32 pm

I am not surprised at any of what they are saying, its been planned all along to buy it, sell off everything they can, and then resell whats left. They do have a lot of vacant land etc but who wants it, at least whats here in Toledo no one really does. :wink:

Tom!

Jeepjeepster · **Posted:** Fri Dec 21, 2007 1:37 pm

That hurts a little.

KJ4ME · **Posted:** Fri Dec 21, 2007 2:20 pm

so if chrysler crashes and burns... who is going to service my jeep??? :lol:

hyedipin · **Joined:** Thu May 11, 2006 10:20 am **Posts:** 1667

Jeepjeepster wrote:

That hurts a little.

you had stocks? if not, why does it hurt? They brought this onto themselves.. it's not your fault.

Looks like Dr. Z knew when to pull out..

tommudd · **Posted:** Fri Dec 21, 2007 4:16 pm

Jeep itself is making money its the morons that bought everything doing what they can to sell, and steal everything they can from the company before it goes up on the auction block again.

If Richard Gere had been after Chrysler in Pretty Woman this is what he would of done as well :lol:

Big A · **Posted:** Fri Dec 21, 2007 4:25 pm

Kinda makes ya wonder...

I am curious what it would cost per Jeep owner, To BUY Jeep from the losing Chrysler... Probably MORE than i can imagine... :roll:

tommudd · **Posted:** Fri Dec 21, 2007 4:51 pm

Big A wrote:

Kinda makes ya wonder...

I am curious what it would cost per Jeep owner, To BUY Jeep from the losing Chrysler... Probably MORE than i can imagine... :roll:

it has been talked about by union members/Toledo area movers and shakers etc. Harley did it and look at them now. Jeep could be the same if things could be worked out, one of the big stumbling blocks is retirement of the union employees though.

JIMMY JEEP · **Posted:** Fri Dec 21, 2007 8:03 pm

chrysler arent alone most of the big boys are running at a loss . Most American and Europian car manufactures are close to ruin ,but the Japenese are getting more and more of the market share. Not suprising when you look at there build quality and reliability ,which has come on leaps and bounds in the last few years.

InCommando · **Posted:** Fri Dec 21, 2007 8:05 pm

Cerebus was in the business of dismantling companies, not building cars. This was scary from Day 1.

Guest · **Posted:** Fri Dec 21, 2007 8:54 pm

tommudd wrote:

If Richard Gere had been after Chrysler in Pretty Woman this is what he would of done as well :lol:

I know there's a gerbil joke in there somewhere, I just have to work it in...

I've heard that there was a law that there has to be parts available from the manufacturer up to a decade after a company quits manufacturing said vehicle...how does that work if the company's changed hands more than twice in a decade?

Albert · **Posted:** Fri Dec 21, 2007 10:01 pm

I really hope not only Chrysler, but GM and Ford can pull through........It makes me sad.

In the future we will be buying lead paint dipped "Geely's" (or however you spell it) at the "dollar Store".

Guest · **Posted:** Fri Dec 21, 2007 11:22 pm

tommudd wrote:

Big A wrote:

Kinda makes ya wonder...

I am curious what it would cost per Jeep owner, To BUY Jeep from the losing Chrysler... Probably MORE than i can imagine... :roll:

it has been talked about by union members/Toledo area movers and shakers etc. Harley did it and look at them now. Jeep could be the same if things could be worked out, one of the big stumbling blocks is retirement of the union employees though.

You mean not even the union thinks a company can be profitable while supporting all the things the union has demanded over the years... :shock:

Kind of telling, if you ask me.

Uffe · **Posted:** Sat Dec 22, 2007 4:58 am

Those guys better be making JKs when I have the money for one

ATXKJ · **Posted:** Sat Dec 22, 2007 9:21 am

ThunderbirdJunkie

Quote:

I've heard that there was a law that there has to be parts available from the manufacturer up to a decade after a company quits manufacturing said vehicle...how does that work if the company's changed hands more than twice in a decade?

if they change owners - no real impact - if they declare bankruptcy or if they go out of business completely your lawyer might be able to find someone to sue - but your odds of finding parts is better on Ebay.

Uffe

Quote:

Those guys better be making JKs when I have the money for one

Jeep may be the only division of Chrysler that other companies would want to buy - huge name recognition and owner loyality.

k99jk99j · **Posted:** Sat Dec 22, 2007 9:35 am

according to this article from admin every thing is going as planned. good readAllpar News: Robert Nardelli Responds to Media ReportsChrysler has released the following comments from CEO Bob Nardelli regarding Chrysler's finances and outlook:

“There have been several recent media reports that have painted an inaccurate picture of Chrysler LLC’s current financial position. Therefore, the management of Chrysler and our parent company, Cerberus Capital Management, L.P., felt it imperative to correct the record since such misinterpretations and misperceptions are misleading and could leave the wrong impression in the minds of investors and other interested parties.

First and foremost, it is important to note that Chrysler is not only meeting, but, in many cases, exceeding its financial targets heading into 2008.

Importantly, Chrysler has ample liquidity. We are fully funded with working capital to meet our present and future needs and objectives. We are doing what any other prudent company is doing during this challenging economic environment. We are trying to instill a sense of urgency throughout the workforce, putting our capital to work effectively and efficiently, streamlining inventory, improving current products and developing new and innovative vehicles. Our dealer body is quite pleased that our inventory of vehicles was down another 4 percent in November.

In a 13-hour meeting this week with the Cerberus board of directors, Cerberus praised and was highly complimentary of Chrysler’s progress to date and unanimously approved our 2008 plan. We have a solid strategic direction to return the company to long-term profitability. We are on target and have the unwavering support of Cerberus, as well as our other key partner, Daimler AG.

Cerberus met with its investors last Thursday to share the progress that has been made and to convey to these investors that the company was meeting – and in many cases – exceeding – its targets. The report was well received.

Like many companies in today’s uncertain economic environment, Chrysler is moving aggressively to improve its business. We recognized in advance the increasingly competitive vehicle market heading into 2008. With that, we have been moving aggressively to make our company leaner. The steps we are taking include previously announced volume-related reductions at several North American assembly and powertrain plants and the elimination of four products from our lineup, which is very customary in the auto industry.

However, we are very excited about the new products coming in 2008. These include the legendary Dodge Ram pickup truck, the Dodge Journey crossover, the relaunch of the historic Dodge Challenger – which has already generated 8,851 customer orders – and two, all-new, large hybrid SUVs, the Chrysler Aspen and the Dodge Durango, demonstrating our support for the environment and more fuel-efficient vehicles.

For our current vehicle line-up we have already approved more than 260 line item improvements to enhance our products – most for the 2008 calendar year.

The recently completed national labor agreement with the United Auto Workers – which includes the establishment of an independent retiree health care trust – provides a framework to improve the long-term competitiveness of the company.

Since August and the first day of the new company, the management team has been working to improve Chrysler’s working capital, disposing of non-core (or non-earning) assets and reinvesting this cash into product development, new technology and new innovations for our customers.”

The following related statement can be attributed to Mark Neporent, Chief Operating Officer and General Counsel of Cerberus Capital Management L.P.:

"We remain extremely enthusiastic about our investment in Chrysler. Our underwriting assumed, and fully planned, that Chrysler would incur losses in the near term. Under the leadership of Bob Nardelli, Tom LaSorda and Jim Press, Chrysler is already on track to exceed its multi-year restructuring and recovery plan on virtually all key metrics. We met with the management team this week and fully endorse their strategic direction and their plan to meet the challenges of the current environment. We are confident that Bob, Jim and Tom are taking the right steps to bring Chrysler to profitability. Our mutual resolve to restore Chrysler to its leadership position as an iconic brand is unwavering."

--------------------------------------------------------------------------------

Uffe · **Posted:** Sat Dec 22, 2007 9:37 am

ATXKJ wrote:

Uffe wrote:

Those guys better be making JKs when I have the money for one

Jeep may be the only division of Chrysler that other companies would want to buy - huge name recognition and owner loyality.

They better! As things are right now, I don't think I want to buy a toyota or nissan. I want another jeep

Still need to find out about reliability in the long run, and I hope not to be disappointed

Chrysler "operationally" bankrupt

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