News // Autos
Loans to U.S. Automakers Delayed
30 December 2008 , 10:121570
General Motors is expecting the loan Tuesday, according to a senior industry source. The delay was because of the complexity of the transaction, the source said.
Chrysler and GM were scheduled to receive $4 billion each in loans Monday - and GM has warned that it will fall below the minimum amount of cash it needs to continue to operate without the loan before the end of the month.
"We're making good progress finalizing the automaker loans and are committed to closing them on a timeline that will meet their individual near-term funding needs," said Treasury spokeswoman Brookly McLaughlin.
Privately held Chrysler said it will need $4 billion or it will also run out of cash early next year.
Ford Motor has more cash on hand and has said it should be able to avoid tapping into federal dollars unless the weak auto sales continue longer than it expects in 2009.
"GM continues to work with the federal government on the final stages of the loan agreement, and we remain confident a timely signing of the federal loan agreement will occur prior to our needs," company spokesman Greg Martin said. "GM appreciates the government's leadership in working with GM at this critical time for the U.S. auto industry."
Chrysler spokesman Ed Garsten said that Chrysler had not heard when the loan would be available.
Both automakers, however, acknowledged that the money would not be forthcoming on Monday.
U.S. President George W. Bush announced the loans on December 19, saying they were needed to prevent the collapse of the U.S. auto industry. The money will come from the $700 billion fund set aside in October to bail out Wall Street firms and banks.
General Motors is to receive a second loan of $5.4 billion on January 16. If Congress gives its blessing, General Motors could receive an additional $4 billion loan on February 17.
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