DealZone

My other car is in limbo

miniimage1 Be careful what you wish for. 

Just a week after launching the cash-for-clunkers rebate program, policymakers and auto executives are left sorting through the chaos caused by the program’s runaway success.

As of Friday, there was no knowing how much longer funding for the program will last. The Obama administration has reassured car shoppers and dealers that any trade-ins over the weekend will be honored at rebates for up to $4,500. Meanwhile, the U.S. House rushed to triple funding  for the program, adding another $2 billion in a bill that heads to the Senate where it could face tougher scrutiny.U.S. car sales for July, set to be released on Monday, are expected to show a turbocharged boost from the government program, a sleeper success in a string of policy steps aimed at stabilizing the U.S. auto industry that has included government-sponsored bankruptcies at GM and Chrysler.Before the rush of clunker trade-ins, analysts had been looking for industry-wide July auto sales to top 10 million units, the highest rate of 2009 and an encouraging sign the market has turned the corner. Investors have discounted some of that recovery. Shares in AutoNation, the No. 1 dealership group, have gained 48 percent since the start of the second quarter. Shares in the No. 2 dealership group, Penske Automotive Group, have more than doubled.With inventories tight, automakers also stand to gain as production — and revenues — increase in the second half. July sales data will help sort the winners from the losers, but the early anecdotal evidence suggests that the some of the biggest gains have gone to the automakers that were already outperforming. Hyundai says about 18 percent of its sales in the month of July included a cash-for-clunker backed trade-in. Ford,  which is seeking to distance itself from the rest of Detroit, reports that cash-for-clunker trade-ins were boosting sales of smaller, more fuel-efficient cars as opposed to crossovers and trucks. That is also the area where Ford’s product line-up is seen as giving it an edge against GM and Chrysler.

from Commentaries:

Bankruptcy-related M&A at 5-year high – more to come?

This week's Thomson Reuters Investment Banking Scorecard shows bankruptcy-related M&A at a five year high.

 

There were five bankruptcy-related M&A deals announced during the week, including the acquisition of venture-backed public company Nanogen by French investment holding company Financiere Elitech for $25.7 million. 

 

So far this year there have been 173 bankruptcy-related deals, the highest level since the same period of 2004 when there were 202.

Chrysler pleadings innundate court

The Chrysler bankruptcy hearing has swamped a Manhattan court with an unprecedented number of pleadings, according to docket tracking service NetDockets.com.

In the first 45 days of Chrysler’s bankruptcy, attorneys filed more than four times the number of pleadings than over the same period for collapsed corporate giants WorldCom or Enron.

More than 4,200 pleadings were filed in the Bankruptcy Court for the Southern District of New York, said NetDockets. That’s more than the 967 pleadings related to Enron in the first six weeks, or even Lehman Brothers Holdings’ 1,362 pleadings.

Faster than a speeding bankruptcy

After enjoying a bit of confusion from savior Fiat about the imperative of a June 15 deadline, and a quick, 24-hour trip to the Supreme Court, Chrysler creditors now know in no uncertain terms just how much political will there is behind getting the automaker’s government-orchestrated deal done.

The top U.S. court can certainly be counted on to ponderously deliberate matters of vital importance to the nation. But when the consequences of delay are dire (thousands of auto workers’ jobs, a U.S. presidency, etc.), a decision to not make a decision can come with lightning speed.

In a brief two-page order, the justices said opponents of the Fiat-Chrysler deal had not met the burden of showing the Supreme Court needed to intervene. The court’s action was not a decision on the merits of the challenge, they said. The Chrysler dispute marked the first time the Supreme Court had been confronted by legal issues involving the federal government’s power to deal with the economic crisis.

Live blog of the Chrysler bankruptcy hearing

Reuters will be sending live updates from the Chrysler bankruptcy hearing, on the automaker’s plan to reject 789 dealership franchises, expected soon after 0830 ET. Read the updates below or follow us on Twitter.

Deals du Jour

Abu Dhabi sells 3.5 billion pounds of shares in Barclays, making a handy profit, and sending the stock down well over 10 percent. In another share sale, wind turbine maker Gamesa is suspended after Iberdrola offloads 10 percent of the company in the market. Otherwise, cars still dominate: GM has filed for bankruptcy, Germany is to pay bridge financing to Opel today and a U.S. judge said overnight the sale of Chrysler will be effective on Friday. Here are today’s top deals headlines.

And in the newspapers:

British publishing group Pearson is in talks with Prisa over the possibility of buying a stake in Santillana, the Spanish media firm’s publishing house and market leader in school textbooks in Latin America, the Financial Times reported.
Prisa could be looking to sell up to 30 percent of the unit in a 315 million pound deal. Other bidders include Cengage Learning, Oxford University Press and Infinitas Learning, the paper says.

Citigroup Inc told about five former top executives they will not be paid tens of millions of dollars in promised severance payouts, the Wall Street Journal cited people familiar with the matter as saying.

Chrysler lawyer’s e-mails show doubts on speed of deal

Opponents seeking to slow down Chrysler’s blitz through bankruptcy court received unexpected support for their argument on Wednesday: Chrysler’s lead attorneys. 
    An email that turned up during discovery showed that Jones Day attorneys tried to discourage the U.S. government from setting a June 15 deadline for completing a sale of most of the automaker’s assets to a group led by Fiat.
    A lawyer for a group of Indiana pension funds, which oppose the sale, read the email in court which showed Jones Day attorneys said the tight schedule would undermine the credibility of their case, called the time frame a mistake and said it would “stuff the judge” by forcing such a rapid hearing schedule.
    “The debtor lost that one,” said the Indiana fund’s attorney, Glenn Kurtz of White and Case, referring to Jones Day recommendation regarding the deadline.
    Judge Arthur Gonzalez overruled Jones Day attorneys who objected to entering the email, which the U.S. Treasury released during discovery, because it was not meant to be public and tapped into Chrysler’s legal strategy.

-By Tom Hals and Emily Chasan

Liveblogging Chrysler in court

Reuters’ Emily Chasan will be sending live updates from the Indiana pensioners’ challenge to Chrysler’s bankruptcy in U.S. District Court scheduled to begin at 11:30 am on Tuesday. Read her updates on DealZone or follow the DealZone Twitter account.

Back from the dead?

French and German Military surgeons perform abdominal surgery on an Afghan civilian patient at the French Military Hospital in KabulChrysler’s troubles looked so great even its own executives thought the company was headed for liquidation, however emergency surgery in the bankruptcy courts appears to have saved the patient.

As Caroline Humer and Tom Hals write, the sale of Chrysler’s main business to Italy’s Fiat and other groups looks likely to be sealed by the end of May, taking most of the company out of bankruptcy within just 30 days, hitting the government’s target deadline.

Judge Arthur Gonzalez has been instrumental in driving through the process, quickly rejecting objections from a range of creditors. A few sticking points could still hold up the sale, with a group of Indiana pension funds filing suit in a separate court, but most specialists expect the judge to approve the sale to Fiat at Wednesday’s hearing.

Liveblogging the Chrysler bankruptcy hearing

Reuters’ Emily Chasan will be sending live updates from the Chrysler bankruptcy hearing, scheduled to begin at 11:00 am on Wednesday. Read her updates on DealZone or follow the DealZone Twitter account.

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