Chrysler loan sale likely postponed

Reuters
November 20, 2007 - 12:01 am ET

DETROIT (Reuters) -- A $4 billion sale of loans being raised by automaker Chrysler LLC following its takeover by buyout firm Cerberus was likely to be postponed from a planned sale this week, a number of sources said yesterday. Weak credit markets and worsening news from the US autos sector were behind the latest postponement, one source said. Underwriters have been trying to sell $4 billion of Chrysler's debt to investors in the past few weeks and had set a Monday deadline to participate in the sale, sources previously told Reuters. Cerberus Capital Management closed its $7.4 billion deal to buy a majority stake in Chrysler in August from the automaker's former parent, Daimler AG. The deal to buy Chrysler has already been funded by the underwriters. Those underwriters are now trying to sell a majority of the debt on to other investors. They tried to do this in late July but postponed the sale because credit markets were weak. Since the deal closed, proceeds of the loan have been used to fund working capital for Chrysler. Several separate sources told Reuters that the $4 billion debt sale was likely to be postponed. Confirmation of whether the sale was actually delayed was likely to be known in the next few days, those sources said. Sales for Chrysler, which counts on North American sales for nearly all its revenue, were down almost 4 percent in the first 10 months of the year.