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Chrysler seen in serious financial crunch

Chrysler LLC faces a serious financial crunch and is trying to sell assets to raise cash, The Wall Street Journal reported on Friday.
/ Source: Reuters

Chrysler LLC faces a serious financial crunch and is trying to sell assets to raise cash, just months after the automaker was bought by private equity firm Cerberus Capital Management, The Wall Street Journal reported on Friday.

Chief Executive Bob Nardelli told employees at a meeting earlier this month that the company is headed for a substantial loss this year and is scrambling to sell assets to raise cash, the newspaper said, quoting two people present at the meeting. The newspaper said Nardelli, in an interview, confirmed the account.

“Someone asked me, ’Are we bankrupt?”’ Nardelli said at the meeting. “Technically, no. Operationally, yes. The only thing that keeps us from going into bankruptcy is the $10 billion investors entrusted us with.”

A Chrysler spokesman could not be immediately reached for comment.

Nardelli told the newspaper he made the comment to “convey a sense of urgency” to employees.

He declined to give a forecast for 2008, saying only that Chrysler “will make a pretty significant improvement” over the $1.6 billion it will lose this year, according to the Journal.

In a meeting with Chrysler engineers earlier this month, Nardelli said the automaker has about $1 billion in land, old plants and other assets it will move “very aggressively” to dispose of, even if it has to sell them at prices below book value, the newspaper said.