Obama administration set to announce it will give more money to General Motors, Chrysler [View All]

[steven johnson]

Source: Associated Press

President Barack Obama's auto industry task force was expected to offer additional aid to General Motors Corp. and Chrysler LLC while setting firm deadlines for the companies to get concessions from their stakeholders.
GM and Chrysler, which employ about 140,000 workers in the U.S., have already received $17.4 billion in government loans to survive the economic downturn and the worst decline in auto sales in 27 years. GM is seeking another $16.6 billion, while Chrysler wants $5 billion more.
With the companies running out of money heading into April, any short-term aid would help the auto manufacturers maintain their operations while they seek concessions. Administration officials declined to comment on the plan Saturday.
Task force members have said bankruptcy could still be an option for GM and Chrysler if their management, workers, creditors and shareholders failed to make sacrifices. The conditions could be more stringent than the loan terms set by the outgoing Bush administration in December, officials have said.
Both companies are trying to reduce their debt by two-thirds and convince the United Auto Workers union to accept shares of stock in exchange for half of the payments into a union-run trust fund for retiree health care costs. The loan agreement also called for executive pay cuts and labor costs that are competitive with Japanese automakers with U.S. operations.
GM owes roughly $28 billion to bondholders, while Chrysler owes about $7 billion in first- and second-term debt, mainly to banks. GM owes about $20 billion to its retiree health care trust, while Chrysler owes $10.6 billion.






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