Wednesday, January 7, 2009

Chrysler expenses stay a secret

Public disclosure not part of $4-billion loan


Chrysler LLC, operating with a $4-billion, taxpayer-funded loan from the U.S. government, isn't required to report financial information to the public and has no plan to do so.

Chrysler, closely held by Cerberus Capital Management LP, won't disclose operating results, a spokeswoman said. The loan agreement requires the Auburn Hills-based automaker to report its finances only to the U.S. Department of the Treasury.

Treasury spokeswoman Brookly McLaughlin declined to say whether the department would disclose Chrysler's financial information.

Since Cerberus bought the company in August 2007, Chrysler executives have said that the company's private status allowed it to sell assets and close factories without concern for accounting charges that might alarm a public company's shareholders.

"At the very least, Chrysler should have the same level of transparency that General Motors has," said Peter Morici, a University of Maryland economist who testified at congressional hearings in November about the industry. There should be a level of accountability, he said, "that is not present here."

The treasury, trying to avoid a collapse of the companies, pledged as much as $17.4 billion to Chrysler and Detroit-based General Motors Corp. on Dec. 19. Chrysler got $4 billion Jan. 2 and must show by Feb. 17 how it will return to viability. Chrysler also must submit weekly status reports, biweekly cash statements and monthly certifications to the treasury to show that it's complying with policies on expenses.

The agreement doesn't require Chrysler to disclose results to the public.

"We are not in a position to mirror publicly traded companies, as our investors remain private," Chrysler spokeswoman Lori McTavish said in an e-mailed response. "However, the company is obligated to our private investors and lenders, and as such, keeps them apprised."

Cerberus spokesman Peter Duda declined to comment.

Chrysler has revealed select information during the past year. Through the first half of 2008, the company said its losses amounted to about $1.08 billion. During congressional hearings in November, CEO Bob Nardelli said the company had $6.1 billion in cash at the end of September.

Chrysler was partly forced into reporting financial information because Daimler AG, which owns 19.9% of the automaker, has been reporting losses -- with a three-month delay -- for its stake.

Chrysler has been saying that Daimler's accounting for Chrysler's losses -- which equal 3.62 billion euros ($5.52 billion) for the first half of 2008 -- vastly overstates actual losses because of the differences in accounting between U.S. and international accounting methods.

Without a loan from the government, Nardelli said, the company could run below the $3-billion minimum level of cash required to operate sometime this month.

Chrysler finished 2008 with a 53% decline in December U.S. new-car and light-truck sales. U.S. sales fell 30% for the year, the most of any major automaker.

1 comment:

Pre Owned Lexus said...

Let's respect privacy. If that's what they really want.