3 Jan 2009

Chrysler gets $US4 billion emergency loan

6:27 pm on 3 January 2009

The US Treasury says it has finalised a $US4 billion loan to troubled cash-strapped car manufacturer Chrysler.

"Treasury today finalised the loan transaction for Chrysler car company and funded the full amount of $US4 billion," Brookly McLaughlin, a Treasury spokeswoman, said in a statement.

Chrysler Chairman and CEO Bob Nardelli said "this initial loan will allow the company to continue an orderly restructuring, while pursuing our vision to build the fuel-efficient, high-quality cars and trucks people want to buy, will enjoy driving and will want to buy again."

The loan is part of a $US13.4 billion rescue package the US government approved in December for General Motors and Chrysler to stave off collapse amid tight credit and dismal sales.

The first segment of the bailout provides $US4 billion each to GM and to Chrysler, the smallest of the Big Three US carmakers.

GM, the largest US carmaker, was to receive an additional $US5.4 billion in mid-January and would be eligible for a further $US4 billion from February pending congressional action.

Treasury has also provided $US6 billion in aid to GMAC, GM's financial arm.

Under the agreement, the carmakers will have to prove their viability by March 31 or the government could require the funds to be repaid within 30 days.

The Treasury announced on December 19 a massive rescue of GM and Chrysler, facing a threat of imminent bankruptcy that could create economic chaos and throw millions out of work across the country.