Chrysler is adamantly denying rumors that it has filed for bankruptcy amidst record low sales, high fuel prices and increased production costs. Majority stakeholder Cerberus Capital Management LPC also stated that there was no basis to such rumors.
"The rumor is without merit. There is no basis for the rumor," spokesman for Chrysler Dave Elsoff said.
During last year's 80 percent takeover of the automaker by Cerberus from Daimler AG, Chrysler was given a $2 billion dollar credit line to utilize in its restructuring -- $1.5 billion of which is derived from Daimler -- that could be drawn from until August of this year. Recently, Chrysler has done so at a fixed interest rate of seven percentage points above the London Interbank standards.
Fueling many of the rumors concerning Chrysler's financial demise was a leaked company memo issued by CEO Bob Nardelli that admitted sales figures are worse than anticipated and that the company is struggling to find car buyers. Chrysler has recently cut models from its lineup, focused its production resources onto smaller, more fuel efficient vehicles and cut its workforce in its hopes to lure more buyers to the brand.
Still, company officials maintain their stance that the situation will improve in the near future. During a recent commencement ceremony honoring former Chrysler chairman Lee Iacocca, the former head stated that cars are "still a vital business" in America.
"We'll live through it. Don't panic. Things are going to be OK," Iacocca said.
According to Chrysler marketing manager Deborah Meyer, the automaker's focus will be strictly on satisfying the customer's needs (i.e. building fuel saving vehicles). "If we can stay focused on that with all this rolling around, then we will be okay."
Chrysler lost roughly $1.6 billion last year and according to company records, ended 2007 with $9 billion in cash. So far this year sales are down 23 percent compared to last.
Source: Reuters, Automotive News (Subscription required)