The Cerberus Capital Management LP-owned automaker said its cash reserves will fall to $2.5 billion by year's end, and it faces $11.6 billion in major expenses in the first quarter. Chrysler, which hopes its ongoing restructuring will save some cash and help it pay some of its bills, is asking for $7 billion in low-interest loans to bridge the gap.
In return for the funding, Chrysler pledged to aggressively pursue strategic alliances and partnership and ramp up production of high-mileage vehicles. Cerberus is also expected to say it will convert its debt holdings in Chrysler to equity.
Earlier on Tuesday General Motors Corp. warned that it needs as much as $18 billion in loans, some before year's end, to meet expenses. That company vowed to cut deep in return for the loans, promising to scale back its number of brands, close factories and reduce capacities in an effort to create a more viable company. Ford Motor Co., meanwhile, said it hopes to be breakeven by 2011 without assistance, but requested $9 billion in loans be made available for it to use should conditions worsen.
The heads of all three companies will appear before the Senate Banking Committee Thursday morning to discuss their plans, with the Big Three hopeful that the loans might be approved as soon as next week. - Lou Whiteman
See complete coverage of GM and Ford's turnaround plans at TheDeal.com
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Chrysler LLC became the last of the Big Three automakers to unveil its turnaround plan Tuesday night, painting a dire picture of a company that could run out of cash early in 2009 absent government assistance.
