US giant Chrysler could be out of business before 2008 is over. A report by CEO Bob Nardelli details Chrysler's deep financial crisis which may end the company's fortunes very soon.
Chrysler has provided a rare glimpse into its operations by revealing how "fragile" and "dangerously close" to financial ruin it is. Chief Executive Officer Bob Nardelli lay a plea in Washington, detailing some of the urgent problems his company is facing, such as an extreme shortage of cash.
To paint a picture, Chrysler (now privately owned and therefore not obligated to reveal its financial status) has ended the third quarter of trading year with $6.1 billion in cash, having burnt through $3 billion during that quarter. Nardelli is asking for $7 billion in immediate cash. This may not be enough though. The CEO said: "Chrysler has billions of dollars in cash payment obligations to pay wages, to pay suppliers, to pay health care and pensions, all in the range of about $4" billion "to $5 billion a month."
Plus obligations listed as: $20 billion in health care obligations, $2 billion in annual pension payments to retirees and surviving spouses, about $7 billion in current payables and $35 billion in future annual supplier business. A quick cash loan or proceeds from a sale would not benefit Cerberus apparently.
"Our private equity owner," Cerberus Capital Management LP," Nardelli stated, "has made it clear that they will forgo any benefit from the upside that would, in part, be created from any government assistance that Chrysler LLC may obtain."