Auto Giants Ask Government for Rescue Package to Aid in Merger
Two sources with direct knowledge of talks between GM and Chrysler said on Monday that General Motors and Cerberus Capital Management have asked the U.S. government for roughly $10 billion in an unprecedented rescue package to support the auto giants' merger.
According to one of the sources, who was not authorized to discuss the matter publicly, the government funding would include roughly $3 billion in exchange for preferred stock in the merged automaker.
The U.S. Treasury Department is considering a request for direct aid to facilitate the merger and a decision could come this week, sources familiar with the still-developing government response said earlier on Monday.
An injection of $3 billion in equity to support a GM acquisition of Chrysler would be roughly equivalent to the current, depressed value of the top U.S. automaker.
It would also give U.S. taxpayers a large stake in the turnaround of a struggling auto industry that employs over 350,000 American workers and is credited with supporting employment for another 4.5 million in related fields.
Published on October 28, 2008
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