GM will get $2 billion under the programs, which guarantee payments owed to suppliers, continued Morgan, Chrysler will be able to use $1.5 billion.
Morgan continued, “These efforts, backed by U.S. Treasury resources, will help stabilize the auto-supply base and restore credit flows in a critical sector that employs more than 500,000 American workers.”
The federal government is trying to avoid supplier shutdowns as GM and Chrysler operate with $17.4 billion in Treasury loans and face the possibility of bankruptcy protection. U.S. sales of new cars and light trucks tumbled 38 percent in this year’s first three months, and automakers have scaled back production, squeezing parts makers.
The government initially made $5 billion available for any U.S. automaker that wanted to participate. Ford Motor Co. declined to take part, saying it had enough funding to pay its suppliers. The support programs are open to accounts receivable for goods shipped after March 19 that meet required commercial terms, the Treasury said.
“This program will help supplier’s access much-needed liquidity during these very difficult economic times,” Morgan said.
Suppliers of Detroit-based GM and Auburn Hills, Michigan- based Chrysler will have accounts receivable guaranteed by the government for a 2 percent fee, or paid immediately for a 3 percent charge.
Hoffman Meyer Associates is Seattle's leading merger and acquisition, business brokerage firm. As a mergers & acquisition firm, our principals have completed scores of transactions of privately and publicly held companies during the past 25 years. Over the years, our firm has developed strong relationships with companies and individuals that are ancillary to the mergers & acquisition process including banks, mezzanine lenders, asset lenders, transaction attorneys, certified public accountants, and financial planners. We are also affiliate members of leading merger & acquisition, business valuation, accounting and brokerage associations.
