Financing issues stall Chrysler, GM talks

DETROIT (AP) — Several issues standing in the way of General Motors Corp.’s acquiring Chrysler LLC have been resolved, but others remain including the big one: how to finance the deal, according to two people who have been briefed on the talks.

Both people said GM’s management, including CEO Rick Wagoner, would remain in place should a deal take place, because GM would be running the company. Neither wanted to be identified because the talks are confidential.

One of the people said the deal isn’t close yet.

“There are issues besides financing,” the person said.

Chrysler’s owner, Cerberus Capital Management LP, is still talking with GM about financing a transaction. GM is lobbying the federal government for $10 billion to $15 billion in aid to help keep the company going and possibly to make the Chrysler deal work.

That could include direct aid and loans from the government, a government equity stake in GM, and Cerberus having an equity stake in GM.

GM, which is burning through more than $1 billion per month, is interested in acquiring Chrysler to access its $11 billion cash stockpile. Chrysler, however, has an unspecified amount of debt, and many of its dealers, factories, brands and models duplicate GM’s and likely would be shed if GM acquires Chrysler.

GM likely wants government dollars to make the numbers work to acquire Chrysler, perhaps using some of the money to shut down redundant Chrysler operations.

A merger would cost 25,000 to 35,000 jobs at the automakers, according to a Michigan consulting firm.

But the Anderson Economic Group of East Lansing said Wednesday the alternative of Chrysler being sold in pieces would result in many more job losses. A GM acquisition, with possible help from the federal government, is a likely possibility, Patrick Anderson, the firm’s CEO, said in a conference call with reporters.