I'm passing on all the auto stocks. See below article from Bloomberg.
GM, Chrysler Have 70% Chance of Filing Bankruptcy, Moody’s Says
By Caroline Salas
Feb. 18 (Bloomberg) -- General Motors Corp. and Chrysler LLC, the automakers seeking as much as $21.6 billion in additional federal aid, have a 70 percent likelihood of filing for bankruptcy, according to Moody’s Investors Service.
“We continue to see a high risk of a Chapter 11 filing by one or more of the U.S. auto makers with the government providing” debtor-in-possession financing for the bankruptcy process, Bruce Clark, an analyst at Moody’s in New York, said in a statement today. The report reiterated an estimate Moody’s made in December.
Detroit-based GM and Chrysler of Auburn Hills, Michigan, met a deadline yesterday requiring that they show progress in revamping operations with $17.4 billion in loans granted so far. They also got a boost from tentative accords with the United Auto Workers to cut labor costs.
If GM and Chrysler fail to show by March 31 how they will become profitable, the Treasury Department can recall the money or require it to be used as bankruptcy financing. The two automakers said in filings yesterday that Chapter 11 restructurings may cost taxpayers as much as $110 billion and lead to liquidation, potentially costing millions of jobs.
“Because of the potential reluctance of constituents to make adequate concessions and the considerable complexity of the reorganization, the government may in fact have to stand aside and allow one or more of the companies to make a Chapter 11 filing as a measure that could accelerate the restructuring that is necessary,” Clark said in the report.
Moody’s rates both GM and Chrysler debt Ca, its second- lowest grade.
To contact the reporter on this story: Caroline Salas in New York at
csalas1@bloomberg.net
Last Updated: February 18, 2009 17:25 EST
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