Autos closer to life support
When President Bush said on Thursday that his administration would not allow a “disorderly” bankruptcy or collapse of the U.S. automakers — leaving “orderly” bankruptcy on the table — it seems to have spurred on the negotiations between Detroit and the White House. General Motors and Chrysler are now close to securing emergency loans as part of a U.S. government aid package, according to sources familiar with the talks.
The aid package being spearheaded by the White House would demand that both automakers restructure by seeking new concessions from unions and creditors, two people briefed on the talks said. With the automakers and the United Auto Workers both desperate to stave off a Chapter 11 filing, which they say would be disastrous, the White House’s discussion of “orderly bankruptcy” may have kickstarted negotiations that have been dragging on ever since Congress rejected the bailout bill once and for all.
UPDATE: Bush is now due to make an announcement on the auto rescue plan at 9 a.m. Eastern time.
One remaining uncertainty is where an emergency federal bridge loan would leave Chrysler, widely considered the weakest of the big three U.S. automakers.
Chrysler Chief Executive Bob Nardelli said last month the privately held automaker needs both taxpayer-backed loans and an alliance with one or more automakers to survive. More recently, Nardelli has said the automaker could restructure to emerge as a stand-alone competitor, but most analysts are skeptical.
DEALS OF THE DAY
** Panasonic Corp said it would spend at least $4.5 billion to take control of smaller rival Sanyo Electric Co Ltd , creating Japan’s second-largest electronics maker behind Hitachi Ltd.
** Dassault Aviation signed a deal to buy Alcatel-Lucent’s 20.8 percent stake in defence electronics firm Thales for about 1.57 billion euros ($2.26 billion), Dassault and Alcatel said.
** U.S. hedge fund group GLG Partners has agreed to buy the UK fund management business of French bank Societe Generale, the companies said.
** Steelmaker POSCO said it was considering swapping shares in itself for a stake in South Korea’s KB Financial Group, the parent of Kookmin Bank, which needs to sell shares to meet domestic banking rules.
** Kyobo Securities, a medium-sized South Korean brokerage, said its top shareholder Kyobo Life Insurance had decided not to sell a stake in the broker due to worsening financial market conditions.
** Kookmin Bank, a key unit of South Korea’s KB Financial Group, will sell its stake in ING Group’s South Korean unit for 339 billion won ($263.1 million) this month, the parent group said.
** South Korea’s retail-focused Lotte Group has purchased a stake in a small domestic asset manager from Japan’s Sparx Group for 62.9 billion won ($48.8 million), in a move to bolster its financial business.