• Feb 25, 2009
It's the General Motors and Chrysler merger saga, take three. A few months ago, GM said "No can do" to the union, taking off its ring and walking out of church. Now GM's bondholders may be contemplating a shotgun wedding, forcing The General back to the altar over the debt-equity swap the automaker needs to conclude to have a chance at more government financing.

GM needs to shed $18 billion in unsecured public debt, but the bondholders have so far been complaining about the equity they're being offered. According to an outside analyst, if bondholders think a merged GM-Chrysler will save the combined company from $6 billion to $8 billion dollars, the bondholder might only agree to the debt-equity swap if GM merges with Chrysler. GM hasn't shared its exchange plan with the bondholders yet, so the stakeholders could change their minds once they have the information.

Of course, the problems with the merger possibility don't appear to be any different than they were last time, and while it might seem appealing to "collapse two problems into one," critics say that one combined problem could be a bigger hassle for the government than the two together. The merged company would still need funding, on top of which it would need billions to simply complete the merger. In short, this deal still doesn't look like it makes sense. Hat tip to Dan.

[Source: Financial Post]


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    • 1 Second Ago
  • 19 Comments
      • 5 Years Ago
      Wow, merge to failing companies together. That makes zero sense.
        • 5 Years Ago
        Know what else doesn't make sense?

        :)
      • 5 Years Ago
      well if the bond holders go thru with this then they are STUPID, as they will surely come out with nothing once the merged company fails and that merged company will fail miserably

      they can barely make sense of how much trouble they have as single companies, now you through in another complicated task and they might as well shut their doors.
      • 5 Years Ago
      Chrysler can be saved by the fiat 500 and alfas that they are bringing over. I think there is a lot of potential value in Chrysler. Just not from their original line up.
        • 5 Years Ago
        Because Chysler lacks a luxury vehicle that brings people to the dealership in the first place. No one even knows what their luxury vehicle is called (300C?) No one cares. Dump that, bring in the Alfa, put it on the showroom and at least get people interested in visiting the dealerships.
      • 5 Years Ago
      How much should one pay for a company that's upside down? The last time Chrysler was sold I heard DB had to pay someone to take it.
      • 5 Years Ago
      If GM and Chrysler didn't have billion-dollar debts they would've been purchased long ago. Their level of sustained debt is what's really keeping them relatively safe. But at the same time, have so much debt is preventing them from using much-needed funds to further develop their products.

      The US has seen the Big3 operate for so long as separate entities. They've operated with the "unspoken" rule not to consider buying one another. Now it's time to just get over it and truly consider a merger b/t the General & Mopar. In this merger, unnecessary mfg capacity could be sold to other auto mfr who need it.

      Yes, it will be messy and costly, but Chrysler's been limping along the side of the road for a while and GM should just slow down, pull over, and pick Chrysler up....so at least they can travel together and discuss real synergies, cutting the fat, and really sticking-it to the foreign competition with their best technologies and designs.

      A merger with Chrysler would force GM to shut down (not sell) HUMMER, GMC. Saturn, Pontiac, and Buick (US-branch only); and focus on its core. Chrysler can live on too, but only with Jeep and Chrysler brands. GM would retain Chevy, Cadillac, and create a dedicated performance division; while Jeep will get Dodge's pickups & CUVs, and Chrysler will continue to sell a mid-sized sedan, SUV/CUVs, minivans, and a large flagship sedan.

      • 5 Years Ago
      Merge with what? There is very little value in Chrysler right now.
      • 5 Years Ago
      NO-NO-NO-HELL NO,
      GM was/ is doing a great job of commiting suicide with assist by RW. It does not need help in speeding it along from the bond holders.
      • 5 Years Ago
      I think the Chrsyler/Fiat should stand.

      GM has enough issues.

      Chrysler's line up needs updating and newer models.

      They need to keep getting assistance and giving assistance to Nissan and still have some business dealings with Mitubishi.

      Also, Peugeot and Citroen as getting on board with Fiat, it can help Chrysler with more platforms, engines and dealerships throughout the world to market their new line ups.

      • 5 Years Ago
      The financial types know nothing about running a car company or providing products to actual consumers. All they know how to do is game the system.

      Haven't they done enough damage to our country already?
      • 5 Years Ago
      Really makes you wonder exactly what makes these execs any different from anyone other Joe Schmoe. They certainly don`t demonstrate higher IQ`s. Is it all in "who you know" or what?
      • 5 Years Ago
      Hmmmmm......

      Chrysler and Fiat team up....

      GM absorbs Chrysler....

      Fiat buys GM for $2 billion. The same money GM paid Fiat to get out of GM BUYING FIAT deal!
        • 5 Years Ago
        #laser

        by a coincidence, I spotted a text at http://www.christonium.com/automotive/ItemID=12351354136185 who mentionned the idea of a GM-Chrysler-Fiat alliance at the last paragraph of his text, looks like great minds meet ;-) it could happens unless Carlos Ghosn of Renault-Nissan decided to step on it before Fiat do.
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