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Chrysler LLC receives US$ 4 billion emergency loan
Editorial Desk

1/5/2009 2:11:44 AM

Chrysler LLC, has said on 5th January, 2009 received a $US 4billion (£2.75bn) emergency loan from the federal government in order to tide over the financial tsunami it has been engulfed with.The Detroit-based company has indicated that negotiations with the US Treasury Department were completed on December 2, 2009 resulting in a loan that will allow the company to continue an orderly restructuring.

We recognize the magnitude of the effort by the Treasury Department to complete the multiple financial arrangements and appreciate their confidence in Chrysler, Chrysler CEO Bob Nardelli said in a statement. Nardelli said that the federal loan will help Chrysler build the fuel-efficient, high-quality cars and trucks people want to buy.

It may be recalled that both Chrysler and General Motors (GM) had appealed to the Bush government for a bailout, as record high fuel prices and a slowing economy resulted in their sales plunging while an unprecedented financial crunch left them cash-strapped.

Under a rescue plan announced by the American President George W. Bush, on 19th December’08, General Motors Corp and Chrysler LLC is all set to receive a bailout package worth US$13.4 billion (in initial government loans) to carry out its operations and have also been instructed to recast its business.

During January ’09, the funds will reportedly be drawn from the Troubled Asset Relief Program (TRAP), which was established to provide succour to financial institutions. The move came a week after the Republican Senate had summarily rejected to provide any funds to the aforementioned companies. An additional US$ 4 billion would also be provided in February’09, bringing the potential total to $17.4 billion. The loans from the US $700 billion TRAP will enable the cash-strapped carmakers to meet year-end obligations, preventing bankruptcies and possible liquidations that also would have toppled businesses that depend on the Big Three for survival.

But everything is not hunky dory for the Detroit biggies. The bailout comes with a rider, as both the companies need to pull up their socks as they have 102 days to slash debt, renegotiate labor contracts, cut down on its input costs, reduce the salaries and other perks of executives, dispose of their brands, rationalise its production and lay plans to cut thousands of jobs or face a government-mandated bankruptcy to fund its continuing operations.

Source : http://www.wheelsunplugged.com/

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