Credit hedgers not all villains in GM saga 12 May 2009 Some fear hedged bondholders will oppose the US government s deal because they can reap gains on CDS contracts by tipping the carmaker into bankruptcy. But they probably hedged before GM s trouble became acute meaning they re not just opportunistic speculators.
Ford launches smart union arbitrage with $2bn stock sale 11 May 2009 The US carmaker s shares have tripled in less than two months, allowing the carmaker to raise cash to pay its healthcare liabilities without diluting its shareholders as much as originally feared. That should please bondholders, too.
Toyota’s cash lessens pain of huge losses 8 May 2009 The Japanese carmaker burned up $6.9bn in the fourth quarter, hit by a strong yen and the US tumble. This year is set to be worse: a 20% sales drop and an $8.5bn loss. But a tank full of cash and good technology should get Toyota across the chasm to thrive on the other side.
UK right to play tough with Jaguar Land Rover 7 May 2009 The government is seeking its pound of flesh from the lossmaking luxury carmaker in return for facilitating a £800m bailout. If the demands drive parent Tata Group to decide it can do without state help, it s a winning move.
Fiat’s dealing will change Italian capitalism 5 May 2009 The probable dilution of the Agnelli family Fiat s controlling shareholders who are as iconic as its 500 car will mark a gear shift for the country. Italy s traditional way to do business is waning. But not necessarily an improvement. Berlusconism would be a deterioration.
Obama’s rhetoric prejudges Chrysler creditors 5 May 2009 The identities of the bankrupt car company s nonTarp creditors are still under wraps. Their lawyers wanted to keep it that way. The US president s rhetoric has made the group wary of going public even to ask for their legal rights. It s a bad precedent for Obama to set.
Marchionne’s jumbo carmaker project is fraught with risks 4 May 2009 The Fiat chief's vision for building a major transcontinental car group on the rubble of GM's Opel and Chrysler simultaneously has theoretical attractions. But multiple hurdles will have to be jumped to pull off this extremely complex operation successfully.
Chrysler holdouts should keep fighting Obama’s cramdown 30 Apr 2009 It s politically expedient to blame recalcitrant hedge funds for forcing the carmaker into bankruptcy by not accepting 33 cents on the buck. But treading on their rights as secured creditors is bad for capitalism and may hamper Obama s exit strategy from Bailout America.
Chrysler may face a bankruptcy battle 30 Apr 2009 The US wants the car company to use an expedited process to get in and out of Chapter 11 quickly. The socalled section 363 approach sounds smart. But some of the company s creditors feel shortchanged and could wage a legal challenge. They have decent grounds to do so.
Fiat goes all in with Chrysler 30 Apr 2009 The Italian car maker has pulled off a remarkable coup. In exchange for noncash bits and bobs, it has secured a path to control the US car company after its bankruptcy. But running a sprawling car maker is difficult just ask Renault s Carlos Ghosn.
Obama has what he needs to restructure Chrysler 29 Apr 2009 With banks holding 70% of Chrysler s secured debt agreeing to the Treasury s 30 cents on the dollar offer, the reorganisation can move ahead. Of course, with the other 40 lenders still willing to fight, it means Chrysler is hardpressed to avoid bankruptcy.
GM takes first real stab at Ch 11 – minus the name 27 Apr 2009 The teetering carmaker is slashing dealers, factories and workers, cutting brands, offering bondholders shares only and even wants the US to swap half its loans for equity. But it may still leave GM s balance sheet laden with tens of billions of dollars of liabilities.
Fiat risks coming away empty-handed 24 Apr 2009 Chrysler may not be enough for the Italian automaker and its ambitious boss Sergio Marchionne. He s also interested in taking on GM Europe. The new gambit might be largely aimed at Chrysler s unions and creditors. But Fiat s multiple cashfree offers could end up with no takers.
VW bailout of Porsche could be price for peace 23 Apr 2009 Luxury carmaker and financial operator Porsche is saddled with debt after building up a majority stake in rival Volkswagen. The prey, VW, could help by buying the predator s car business. But VW s minority holders may chafe at the price of tranquillity using a E8bn cash pile.
Chrysler’s lenders put US car tsar on the spot 22 Apr 2009 The creditors may think their offer of 35% haircut in return for equity matches what they would get in a bankruptcy filing. But Steve Rattner wants much more. He now has an unpalatable choice: reject the offer and let Chrysler go bankrupt or show weakness ahead of GM talks.
GM is in no position to set terms of Opel sale 20 Apr 2009 The US carmaker is reportedly willing to sell a majority stake in OpelVauxhall in return for a E500m injection into its European subsidiary. But GM is in a weak position to set terms. Germany, which would guarantee E3bn worth of loans, will decide the structure of any deal.
Hubris stalks Marchionne, Fiat’s star manager 16 Apr 2009 Fiat s boss has done a great job at the Italian carmaker. But he seems to want more. His latest suggestion: one man could run both Chrysler and Fiat. That sounds like too much for any manager. Marchionne may be the best around, but that doesn t qualify him for impossible tasks.
Why Motown needs harsher treatment than Wall Street 2 Apr 2009 The US has pumped much more cash into big banks but is only threatening car makers with bankruptcy. That seems harsh. But it's fairer than it looks. Sure, Detroit can point to egregious financial sector examples. But Motown s longbroken model requires a heavy hand to fix it.
New Peugeot boss brings steely restructuring nerve 30 Mar 2009 Philippe Varin made tough cuts at steel group Corus and then sold out at the top. He will need his nononsense restructuring skills in his new role as head of French carmaker PeugeotCitroën. He has to please both a newly assertive controlling family and the French government.
US takes on auto reform – good luck 30 Mar 2009 Think restructuring banks is tough? The US car industry s problems are deeper and harder to solve, especially in a recession. Obama will try. He is right to be be harsh on GM and Chrysler. But his administration will struggle to remake a sector that has been mismanaged so long.