Chrysler better bet than GM for fed funds

Ron Kolka, Chrysler’s Chief Financial Officer, says the Auburn Hills automaker s better-positioned than General Motors to weather the current market and repay American taxpayers.

In advance of the March 31 deadline to demonstrate the progress of its restructuring and long-term viability, Kolka noted Chrysler can earn profits at a much lower sales volume than GM.

Speaking in an interview, Kolka said, “If you look at it on a pure-business basis, we are clearly more viable.”

Kolka also said Chrysler isn’t facing a cash crisis at month’s end as it was in December. Its cash position is between $1.9 billion and $5.9 billion and stable.

The request for an additional $5 billion in government-backed loans is to ensure the company will “never be back for more,” Kolka said.

Echoing a statement made earlier by Chrysler CEO Bob Nardelli, Kolka said If Chrysler doesn’t win government support said the company would likely use its remaining cash to shut down the company in an orderly manner.

The main stumbling block at this time is persuading holders of Chrysler debt to exchange their holdings for equity. Cerberus Capital Management has already made an offer to bondholders, which was turned down. This is the same thing that happened with General Motors. Kolka believes it will come down to the federal government negotiating a settlement.

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