Thursday, December 18, 2008

Taxpaper-financed bailout

(Cerberus is interested because they have been told by Treasury that they can have the Wells Fargo tax incentive, i.e. they can monetize past GM losses.- AM)

Last update: 11:41 a.m. EST Dec. 18, 2008

SAN FRANCISCO (MarketWatch) -- The struggles at General Motors Corp. and Chrysler LLC took a surprising turn Thursday with the two automakers reportedly jumping back in to merger talks as they await word from the White House on a crucial cash lifeline.
Chrysler owner Cerberus took the initiative to restart the negotiations that failed weeks ago, when the two ailing automakers, desperate to shore up their finances, couldn't make sense of a deal, The Wall Street Journal reported, citing people familiar with the discussion.
Part of Cerberus' strategy is to protect its majority investments in GMAC, in which it holds a majority stake, and in Chrysler's Chrysler Financial unit, according to the Journal.
GM spokesman Tony Cervone, however, flatly denied the reports.
"We are not in merger talks with Chrysler," he said. "We stated in November that any talks related to a potential merger were tabled so we could focus on our liquidity situation. That remains the case."

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