Chrysler, GM in line for fed loans

May 14, 2010 http://detnews.com/article/20100514/AUTO01/5140346

Chrysler, GM in line for fed loans

Carmakers’ chances are good for low-cost funds to retool plants

DAVID SHEPARDSON
Detroit News Washington Bureau

Washington — Federal officials say General Motors Co. and Chrysler Group LLC face no major hurdles in winning billions of dollars in low-cost government loans to retool factories.

A decision on the loans is expected soon, said Matt Rogers, a senior adviser to the Energy Department. The department has been "quite engaged" with teams from both automakers to review their requests, he said. Neither automaker has publicly disclosed which plants are targeted.

GM has sought $14.4 billion in loans, including financing that Delphi Corp. had initially requested for plants that the Detroit automaker has since purchased. Chrysler has sought $8.55 billion.

Those loans are being pursued from a $25 billion program funded by Congress in 2008. The Energy Department has been criticized for handing out just under $9 billion since then.

Rogers said both automakers have met the financial viability requirements; both are in much better shape financially after exiting bankruptcy.

"Project finance details need to be worked through, but those things are working out just fine as we work directly with the companies," he said. "It’s really a process of making sure that each of the projects that they have are in fact competitive."

Rogers said the department has to certify that specific technologies are competitive and that taxpayers have adequate security that the loans will be repaid.

"Now that we have clear financial statements, we’re actually working quite aggressively with them and expect to get some results there shortly," he said.

The money was critical to both companies’ turnaround plans and would be at a lower interest rate than government loans made during their bankruptcy filings. It could be used to support thousands of factory jobs.

Altogether, the more than 100 applicants, from glass companies to Goodyear, have requested more than $42.7 billion in loans. Among the recipients:

 

  • Ford Motor Co. won a $5.9 billion loan in June 2009.

     

     

  • Nissan Motor Co. received $1.6 billion.

     

     

  • Startup companies Tesla Motors and Fisker Automotive Inc. were awarded $465 million and $529 million, respectively.

     

     

  • Supplier Tenneco won $24 million in October to produce fuel-efficient parts, including at its Marshall, Mich., plant.

     

    Michigan auto suppliers — including Delphi Corp., Lear Corp. and Continental AG’s U.S. unit — collectively sought more than $1 billion. But many were rejected or gave up.

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