GM and Chrysler receive additional $7 billion
The U.S. government will release an additional $4 billion in aid to General Motors Corp. and $3 billion to Chrysler LLC as planned, even before the two automakers outline how they will remain vital and repay the government loans, MSNBC reported.
The aid is on top of the $9.4 billion and $4 billion GM and Chrysler, respectively, already have received from the government.
On Sunday, the Obama administration appointed a task force to oversee U.S. automakers’ restructuring plans.
The Treasury Department will start reviewing the two automakers’ restructuring plans once they are submitted today, but General Motors said it is still in discussions with debt holders and the United Auto Workers union and likely won’t reach a deal until after today’s deadline. GM executives have said that the company only has to show substantial progress by today, with the whole plan finalized by March 31.
GM could seek the $18 billion it requested from Congress in December as it faces its worst-case scenario, with U.S. auto sales at a 26-year low and sales dropping in other parts of the world. Its restructuring plan will likely include more plant closures and cost savings from labor concessions, as well as a reduction in its eight brands.
GM has about $28 billion in unsecured debt and has to pay roughly $20 billion into the health-care trust, while Chrysler has about $9 billion in mostly secured debt and must pay around $9.9 billion into the health-care trust. Some believe GM’s debt burden is too heavy to allow it to compete with Japanese automakers.