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Chrysler Deal Done, Fiat Now Wants Opel
May01

Chrysler Deal Done, Fiat Now Wants Opel

By Brendan Moore

O5.01.2009

fiat-group-logo-smallNo one could blame you if you’re starting to think that Fiat is bent on world domination; after wrapping up the Chrysler deal yesterday and ensuring their return to the huge North American market, Fiat has now turned to the struggling Opel with laser-like focus.

Fiat CEO Sergio Marchionne told reporters in Italy this morning, “Now we have to concentrate on Opel. They are our perfect partner”.

Fiat wishes to invest in Opel, thereby forming a partnership with GM in Europe. In 2000, a flush GM bought 20% of a fairly healthy Fiat for 2.4 billion dollars USD and a put option to purchase the rest of the company. GM and Fiat actually combined some of their operations and shared platforms, and are still together in South America. IN 2005, GM paid an almost-bankrupt Fiat 2 billion dollars USD to get out of the put option.

How times have changed.

GM needs an investment partner for Opel in Europe because Opel is in bad shape, and, because one of the German government’s requirements for providing aid to GM and German-native Opel is that GM gets a partner. The German government, much like the United States government regarding Chrysler, does not believe Opel can turn it around without some help. Unlike the US government, the German government is not pushing Opel into Fiat’s arms; they are not rooting for a particular potential partner, they simply want a partner of Opel that is financially secure, and can manage the company responsibly.

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Chrysler Will Declare Bankruptcy, Say Administration Officials
Apr30

Chrysler Will Declare Bankruptcy, Say Administration Officials

By Brendan Moore

04.30.2009

chrysler-logo-small4Obama Administration officials are telling reporters that Chrysler is going to file bankruptcy today.

President Obama has a press conference scheduled for 12 noon ET to address Chrysler’s travails.

Chrysler’s creditors and the US Treasury department officials just couldn’t come to an agreement to write down Chrysler’s debt. The holdouts (mostly hedge funds who deal in distressed debt) believe that they can get a return of approximately 65 cents on the dollar if Chrysler goes into bankruptcy liquidation. The federal government and the four major lenders who agree with the government offer have offered those holdout creditors a maximum of 33 cents on the dollar and a small equity position. The four major lenders that hold 70% of Chrysler’s debt are Citigroup, Goldman Sachs, JPMorgan Chase and Morgan Stanley – they decided some time ago that the government’s deal was the best they were going to get.

If Chrysler declares bankruptcy, there is little doubt that a tremendous battle over Chrysler’s assets will commence between the Treasury and Chrysler’s creditors.

Although the smart money might lean towards the government in this struggle, bankruptcy judges have a great deal of latitude in their decisions and probable outcomes sometimes get tossed out the window. There is no certainty to outcomes in complex bankruptcies like this one.

Twelve o’clock is only a half-hour away; we’ll get back to you this afternoon after some of the dust has settled.

COPYRIGHT Techshake – All Rights Reserve

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Will Chrysler File Bankruptcy Tomorrow?
Apr29

Will Chrysler File Bankruptcy Tomorrow?

By Brendan Moore

04.29.2009

chrysler-logo-small3Bloomberg News is reporting that Chrysler will file for Chapter 11 bankruptcy tomorrow morning.

The Wall Street Journal is reporting that Chrysler may file tomorrow morning, but, then again, may not, depending on negotiations still going on as I type this at 11:15 PM ET. The business paper states that President Obama has two speeches prepared for tomorrow morning, one speech if Chrysler files bankruptcy tomorrow, and a different one if they don’t.

The Detroit television stations and major news sites in the city are predicting either a Chapter 11 or a “363” sale (bankruptcy court-ordered auction which has certain legal advantages to distressed companies) to Fiat as a whole entity.

Members of the US Treasury department say they are confident that the Fiat-Chrysler alliance can be consummated no matter what happens.

The uncertainty regarding a Chapter 11 filing revolves around Chrysler’s lenders and their refusal so far to accept Treasury terms to settle their loans to Chrysler for some percentage of the amount outstanding. The four largest lenders that hold 70% of Chrysler’s debt, which are all banks, have agreed to Treasury terms, but there are some smaller banks holding out. In addition, almost all of the hedge fund creditors remain unconvinced that Treasury terms are better than what they could realize in bankruptcy court. Therefore, the negotiations continue into the night.

Whatever happens with Chrysler is very likely to happen with GM right afterward.

Nobody is quite sure where that will leave Ford, by far the most healthy of the Detroit Three at this juncture, and the domestic auto company NOT in danger of filing Chapter 11, but apparently that is a problem for another day. However, there is no doubt that a Chapter 11 filing by Chrysler or GM, or both, would put Ford in at least a temporary disadvantage in terms of costs, debt servicing, etc. Of course, the decline in consumer confidence in GM and Chrysler may just about even things out.

It is believed that most consumers will run as fast as they can from a bankrupt auto company, as has happened in the past. But, history may not be the best example in this day and age. Perhaps the debilitating effect on sales may not be as bad as the predictions.

It looks as if we will know more about a potential bankruptcy sometime in the next 12 hours.

COPYRIGHT Techshake – All Rights Reserved

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Pontiac Given Death Sentence, GM Speeds Saturn’s Demise
Apr27

Pontiac Given Death Sentence, GM Speeds Saturn’s Demise

By Brendan Moore

04.27.2009

gm-logo-smallGM’s press conference this morning brought the news we have been expecting; that is, the announcement of Pontiac’s closure. Pontiac is gone next year, sooner than many thought last week. Additionally, in remarks made to the press, Fritz Henderson, CEO of GM, stated that no Pontiac models would be rebadged as other General Motors surviving brands.

If you want a new G8 or a Solstice, you had better get one soon. At least both models should be discounted considerably in the near future.

Somewhat oddly, GM said that they may sell the Pontiac Vibe through 2010, depending on how the contract with Toyota shakes out. The Vibe is the brother of the Toyota Matrix, manufactured through a joint production agreement between Toyota and GM.

Additionally, GM mentioned, just as an aside, that no more Hummers would be built after this model year.

GM also announced that the company intends to slash the amount of dealers by half as part of their restructuring acceleration.

In a surprise move, General Motors more or less pulled the rug out from underneath Saturn, stating that the last Saturn would be built this year as opposed to their previous assurance that Saturn would continue until 2011. Now the company plans to have only four brands in 2010; Cadillac, Buick, Chevrolet and GMC, the truck division.

So, as with Pontiac, if you want one of the new Saturns not shared with other GM divisions (Sky, Astra), you should act soon.

All in all, a very tough and painful day for General Motors.

COPYRIGHT Techshake – All Rights Reserved

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I Will Miss Pontiac
Apr25

I Will Miss Pontiac

By Brendan Moore

04.25.2009

pontiac-logo-mediumGM is almost certainly going to announce next week that Pontiac is shutting down. The news may come as early as Monday.

GM stated initially that Pontiac would survive as a “boutique” brand, but has apparently changed its mind under pressure from the Treasury Department.

Pontiac was launched in 1926, put out bread-and-butter vehicles until the Sixties, when it kicked off the muscle-car trend with the GTO, was thereafter marketed as the “Excitement Division”, started to sag along with the rest of GM in the Seventies, and, has recently had a minor revival of sorts. The most cars Pontiac ever sold in a single year was 896,980 in 1978, which also happens to be when they were churning out mostly awful iron.

The first car I ever drove was a Pontiac Starchief convertible with a 347 with triple carbs. My father, when I was a very small boy, would slide over a bit on the seat, have me stand on the seat, and help steer the car while working the pedals. He especially liked to do this in the deserts of California on the long straight roads typical of the area while other people were coming towards us – he would duck down as far as he could behind the dash (and still be able to see the road), thereby fooling the oncoming cars into thinking a little kid was driving the car at 60 mph. Very big fun.

After awhile, I could actually steer it myself, so I did. I was driving, after a fashion.

When my mother found out, she was unhappy. And both my parents were unhappy when I got into another Pontiac sedan in the driveway a few years later, started it up and drove it down the driveway across the neighbor’s lawn and over their mailbox. I think I was seven.

Of course, my mother had a big ‘ol seven-seater Safari wagon when I was in my teens. I would borrow it when I needed a lot of friend-carrying capacity. One of my friends from a well-off family had a brand-new Pontiac Firebird given to him for a birthday, and so I ended up driving that quite a bit.

I bought a Pontiac Bonneville and a Pontiac Tempest with the OHC six in my twenties, when the cars were as old as I was. Then a long drought of Pontiacs in the late Eighties and Nineties (they weren’t making anything I wanted to buy) which has continued to this day.

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