Outside advisers to the US Treasury are lining up contingency financing options for General Motors and Chrysler as part of a review of restructuring options for the automakers, a Treasury official has said.
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The unnamed official spoke to Reuters after the Wall Street Journal reported that outside advisers to the Treasury were talking with lenders about financing of at least US$40bn for the car companies, should they need it.
People involved in talks with senior administration officials told the paper that the administration believed that the option of Chapter 11 filings by the two automakers needed to be seriously considered.
“Everything is on the table right now,” one person involved in the matter told the paper, adding that president Barack Obama did not want to see more massive job losses in the auto industry.
The Treasury official told Reuters that the action was not an indication of future plans for the companies, but was aimed at ensuring all options were properly considered and made available.
The administration also did not want to anger the United Auto Workers union by appearing to push for bankruptcy, the Wall Street Journal report said, citing the person involved in the matter.
The initial discussions call for private banks to provide the financing known as a debtor-in-possession (DIP) loan with the government guaranteeing or backstopping the loan, the paper said.
In this scenario, some of the financing would be used to pay back the $17.4 billion the government lent GM and Chrysler late last year, the paper added.
