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Chrysler denies report it’s in financial crisis

Chrysler LLC denied a published report saying it is in a serious financial crunch.
/ Source: The Associated Press

Chrysler LLC denied a published report saying it is in a serious financial crunch.

The Wall Street Journal reported Friday that Chrysler is in financial trouble just four months after Cerberus Capital Management LP acquired an 80.1-percent stake in the automaker.

The report was based in part on statements Chief Executive Robert Nardelli made during a meeting with company employees in early December.

"Someone asked me, 'Are we bankrupt?'" Nardelli told the group, according to what two people who were present at the meeting told the paper. "Technically, no, operationally, yes. The only thing that keeps us from going into bankruptcy is the $10 billion investors entrusted us with."

Nardelli acknowledged making the comments in a Thursday interview with the Journal. He also said he meant to foster a "sense of urgency" among employees of a company that expects to lose $1.6 billion (euro1.1 billion) this year.

Chrysler issued a statement Friday evening in response to media reports "that have painted an inaccurate picture of Chrysler LLC's current financial position."

"First and foremost, it is important to note that Chrysler is not only meeting, but, in many cases, exceeding its financial targets heading into 2008," the statement said. "Importantly, Chrysler has ample liquidity. We are fully funded with working capital to meet our present and future needs and objectives."

In the interview with the Journal, Nardelli declined to predict how Chrysler would fare financially in 2008, saying only that he thinks the automaker will show "a pretty significant improvement" over this year.

The Cerberus board of directors praised Chrysler's progress to date and unanimously approved its 2008 plan during a 13-hour meeting this week, Chrysler said in the statement.

"We are on target and have the unwavering support of Cerberus, as well as our other key partner, Daimler AG," the statement said.

Since its sale to Cerberus, Chrysler no longer has to report its earnings. If it loses money this year, it would be the second straight year of red ink. Chrysler lost $618 million in 2006, but made $1.8 billion in 2005.

Chrysler in November announced plans to cut up to 12,000 jobs, just after employees represented by the United Auto Workers ratified a new four-year contract with the company. The cuts include 8,500 to 10,000 hourly jobs and 2,100 salaried jobs through 2008, or about 15 percent of the company's work force. The cuts came on top of 13,000 Chrysler job reductions that were announced in February.

Nardelli said Thursday that sales are meeting the company's targets and that Chrysler's plans for a two-week shutdown of its minivan plant in Windsor, Ontario, were based in part on projections for an even slower 2008.