New York (HedgeCo.Net) – Just days after asking GM Chief Rick Wagoner to step down, President Barack Obama is suggesting that bankruptcy may be the automaker’s best chance at a successful restructuring, according to sources who spoke with Bloomberg News.
However, the White House contends that “the president’s position has not changed,” and that Obama “remains committed to a significant restructuring without a bankruptcy if at all possible.”
According to the sources, Obama is also prepared to let Chrysler go under should they fail to secure an alliance with Fiat SpA. If they do manage to form a partnership, the administration will consider additional aid for Chrysler.
The two U.S. automakers have already received close to $18 billion in government assistance and are seeking an additional $20 billion to stay afloat. Obama has given GM 60 days to revise their game plan which they submitted last month, which he felt needed to be more precise.
The administration believes that a bankruptcy for both companies would lead to a quick and efficient restructuring, though Obama believes GM could possible avoid bankruptcy through negotiations with bondholders and the United Auto Workers.
If the companies were broken down piece by piece, their best assets could be sold, while their more toxic assets could be disposed of. GM could probably salvage their more profitable brands, such as Chevrolet, while dumping their under-performing and gas guzzling Hummer division.
“That could happen very quickly, and it would be much about renewal rather than destruction,” said Representative Candice Miller of Michigan.
Meanwhile, Chrysler said they will continue to explore a possible partnership with Fiat, as well as work with the Obama administration “to secure the support of necessary stakeholders.”
Julie Scuderi
Senior Editor for HedgeCo.Net
Email: [email protected]
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
