Date 2008/11/17 8:12:34 | Topic: Miscellaneous
|The Washington Post has an interesting column on why the GM/Chrysler deal didn't work out:|
The problem, as they say, is that Chrysler's assets are all tied up in debts, and the last thing GM needs is more borrowing on its pathetic balance sheet. Chrysler owns valuable assets, such as its Jeep and minivan businesses. But it also has at least $9 billion of debt -- I say "at least" because $9 billion of loans have been publicly identified, but there may be more debts that we don't know about. Cerberus won't disclose Chrysler's balance sheet.
Cerberus, which got its controlling stake in Chrysler two years ago in return for investing $7.4 billion in the company, has shrewdly been trying to salvage something for its investors by whipping up a bidding war (or the illusion of one), pitting GM, Nissan, and who knows who else against one another.
The column goes on to talk about GM's current cash crisis, and how at first glance, a deal might have made sense, but working through the numbers, things look rather bleak...