Chrysler says it's received $4B bridge loan

/ Source: The Associated Press

Chrysler LLC and the U.S. Treasury Department said Friday that the government had supplied the automaker with a $4 billion loan that was necessary to keep it operating.

Chrysler Chief Executive Bob Nardelli said in a statement the loan would "allow the company to continue an orderly restructuring, while pursuing our vision to build the fuel-efficient, high-quality cars and trucks people want to buy."

Nardelli described the funding as an "initial loan." The automaker had asked Congress to borrow $7 billion.

Chrysler, which is 81 percent owned by Cerberus Capital Management LP, was nearing the minimum level of cash — $2.5 billion — it needed to operate and has been fending off parts suppliers and other vendors demanding cash payments on delivery.

It generally pays suppliers $7 billion every 45 days.

Treasury spokesman Brookly McLaughlin said in a statement that the department finalized the transaction and "funded the full amount of $4 billion."

The loan's completion followed a similar transfer of $4 billion from Treasury to General Motors Corp. on Wednesday, the first tranche of a $9.4 billion loan.

The administration had earlier approved a total of $17.4 billion in aid to automakers, of which GM and Chrysler each were to get $4 billion by the end of December. GM is supposed to get another $5.4 billion in January, and could also get $4 billion in February — if more money from the $700 billion bank rescue plan approved by Congress in September is released.

Ford Motor Co. said it does not intend to use government money to fund operations, as it is in a better financial position than its competitors.

Earlier Friday, GMAC LLC, General Motors' auto financing firm, said the government will also get 5 million preferred shares of GMAC paying 8 percent interest in exchange for its $5 billion capital injection to help GMAC avoid bankruptcy.

GMAC is 49 percent owned by General Motors and 51 percent owned by private equity firm Cerberus.

The Detroit automakers are trying to weather the biggest auto sales slump in more than 26 years.