The troubled Detroit automaker gets its first bailout cash transfer. Chrysler will be getting an additional 5.4 billion US dollars in February and possibly more. The automaker has until March 31 to prove its long-term viability.
Chrysler has finally gotten its first bailout payment - and not a moment too soon. The troubled Detroit automaker had whittled its cash reserves down to 2.5 billion US dollars, the minimum amount of funds it needs to keep operating.
Last Friday, the company received its first 4 billion US dollars in low-interest emergency loans from the US Treasury. As part of the government bailout package, Chrysler will be getting another 5.4 billion in the next few weeks and a possible additional 4 billion dollars issued on February 17, pending approval by the US Congress which will decide on whether to use part of the 700 billion dollar Wall Street rescue fund for the Detroit bailout.
But the bailout for both GM and Chrysler is coming at a heavy price. As a condition of the loans, the US government will own a considerable share of each company and is demanding that both automakers obtain significant concessions from the United Auto Workers, the union that represents their employees, as well as from their suppliers and creditors. The car makers have until March 31 to prove their long-term viability or the government has the power to call back the loans and essentially force GM and Chrysler into bankruptcy.