Cerberus is the highly secretive private equity company that owns Chrysler, the ailing American automaker that just scored $4b from the Troubled Asset Relief Program (TARP). Cerberus also owns 51 percent of lender GMAC (soon to be less) and all of Chrysler Financial Services. And a lot of Burger Kings. Anyway, The New York Daily News reports today that “Cerberus says it will invest the first $2 billion of Chrysler Financial profits back into the financing arm’s parent automaker.” WHAT PROFITS? This horseshit comes hard on the heels of Cerberus pledge not to take any profit on Uncle Sam’s forthcoming $4b “investment” in Chrysler. WHAT PROFIT? CEO “Boot ’em Bob” Bob Nardelli and his golden parachuted pals want us to believe that Chrysler is determined to become a profitable automaker. Is there anyone who actually believes that? FYI, make the jump for Cerberus’ reason why Uncle Sam must boldy go where the equity firm fears to tread.

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I’ve finally convinced one of our Delphi insiders to let us go public with the bankrupt parts maker’s layoff plans. I know it’s not exactly what you’d call Christmas cheer, but imagine how the affected workers feel. This is the presentation that Delphi’s HR department is detailing Delphi’s “Temporary Layoff” (a.k.a. TLO) policy. The nasty bit: after Delphi temporarily lays off a worker, they can cut their pay and change their job when they return, at will. “If you don’t show up to work on the designated date after your TLO, they also consider it a ‘voluntary quit’ (as opposed to what?). It appears that they are already getting a campuswide TLO ready for possibly the end of January for two weeks (including execs), and that we will have a two-week TLO pretty much every quarter until some unspecified time.” Bottom line: Delphi is still going down.

President Bush has pledged $4b of your taxes to Chrysler. Ultimately, the money will be under the control of the ailing American automaker’s owners, Cerberus Financial. Despite the enormous call on the public purse to fund a company whose prospects are dimmer than a 70’s porno theater, the secretive private equity group that pulls ChryCo’s strings has not opened the company’s books to full public scrutiny. Fortunately, we have a little something called the free press (and I don’t mean you Freep) ready to poke its nose into the dealings of the company about to poke its nose into the federal trough. The Wall Street Journal [sub] reports that “Public documents filed in Oakland County, Mich. show a Cerberus subsidiary called Auburn Hills Owner, LLC, bought the 458-acre complex on Aug. 3, 2007, for $325 million. That same day, Cerberus completed the deal to take over 80.1% of Chrysler from Daimler.” While the Journal seems obsessed with the fact that ChryCo employees didn’t know that Chrysler proper doesn’t own the Auburn Hills campus, the accounting behind the transaction is more interesting…

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Can you believe it? And to think they were trying to become the first firm to offer a production diesel-hybrid. In 2010. Sound familiar?

When Chrysler stuck its nose in the bailout trough, the ailng American automaker’s executives  had to wonder what the Hell anyone within the company could possibly tell lawmakers/money givers about Chrysler’s viability. Except, you know, the fact that they don’t have any. But never underestimate the power of positive PR or, as we call it around here, bullshit. To wit: former ToMoCo Prez and current ChryCo co-Prez Jim Press’ comments to Automotive News [sub, AN]  last week. “He suggested that Chrysler could show the way to a sustainable model for a smaller U.S. auto industry. ‘If there’s one company in America that can build high-craftsmanship, innovative vehicles, it’s Chrysler,’ Press said.” Hey, is Jimbo saying American can’t build high-craftsmanship, innovative vehicles? Anyway, down ye olde rabbit hole we go…

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Egan-Jones Ratings is a relatively obscure little outfit out of Haverford, PA. It’s one of those companies whose website doesn’t have a flashy design or, for that matter, a phone number (just a contact form). Forbes rates them number 1 on their list of eight financial mavens (not ten!) “who saw the crisis coming.” “A vocal critic of rivals Moody’s, Fitch, and Standard & Poor’s, Egan has a track record of warning investors about poor credit quality long before the Big Three ratings agencies. Most recently he said to shun subprime-mortgage-backed bonds even while the other agencies said these were investment-grade credits.” And now Sean has a few words on Ford, via a ginormous Fordetorial in Bloomberg. ““It’s unrealistic of Alan [Mulally] to expect Ford to survive, let alone profit, when they’re experiencing a 30-plus percent decline in sales. Without a bankruptcy filing and a complete reorganization, Ford is not going to be profitable, period.” Egan ain’t kidding. His company rates Ford’s debt a D, its lowest level. And if that’s not enough blowback for Mulally-loving Fordophiles, here’s some more…

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You might think that Barron’s would ease-up on the “bet on GM” advice. In a June 2 cover story, Barron’s told its readers to buy shares in the ailing automaker. At the time, The General’s stock traded at $17.10. “GM’s turnaround will accelerate over the next two to three years, even if the U.S. cyclical downturn dims the outlook for the next 12 months,” Barron’s prophesied. “The shares could rise to at least 30 and maybe as much as 45 once those big cost reductions drop to the bottom line in 2010. And if the stars align perfectly — the economy enjoys a second-half uptick and the housing market and consumer confidence turn for the better sooner than expected — the stock’s rebound could be quicker. Even a small improvement in sentiment could bring a disproportionate rise in the stock.” To be fair, in November, when the excrement and air movement device had already collided (but good), Barron’s did the mea culpa thing: “Our enthusiasm for GM was clearly wrong, as was a suggestion that its bonds, like the senior note maturing July 15, 2041, would be more valuable.” And now, Ward’s Auto reports “GM restructuring may make bonds best bet-Barron’s.” There’s more, but we’re not subscribers– to either publication. At close of play Friday, GM’s stock traded at $4.49 a share– and that’s AFTER the bailout.

With $17.4b pledged to GM and Chrysler, and the Canadian “plus one” on the way (er, “plus several billion,” actually), the dark days of Carpocamageddon are all but over, right? Of course not. As several of the B&B point out in comments on the bailout announcement, GMAC is a giant question mark hanging over the entire situation. The former GM captive lender is headed for a massive GDIF (God Damn, It’s Friday) moment today unless about $5b of healthy capital lands on its lap… within hours. The AP reports that GMAC admits that it has no way of extending or sweetening the deal, implying that bankruptcy is an inevitability. And here’s the kicker: according to Brian Johnson of Barclays Capital, if GMAC were to fail, GM could need an additional $9 billion to $13 billion in funding to supply financing to its dealers. And GM only gets $9.4b from the bailout until February. One step forward and two steps back? Actually, the real bad news which the bailout does nothing to stop comes from GM bondholders. And their newly hired legal help. Read More >

The fate of GM’s dead brands walking generates rumor and hearsay like few other topics. GM is unraveling into a buyers market, and secret talks are typically denied within hours of their leaking. Ironically, one detail that rumors seem to have in common is the proliferation of Opels in the United States. Thus far Saturn has been the defacto donor brand for American Opels, but Motor Trend now claims it “makes sense” for Buick to cover Opel with brand familiarity. Read More >

The Wall Street Journal (WSJ) reports that General Motor’s former captive finance unit and current chest-strapped TNT device looks set to miss its deadline for a debt-for-equity swap. GMAC needs to get the deal done to transform itself into a bank and score federal funding under the Troubled Asset Relief Plan (TARP). “GMAC needs to show $30 billion of capital in order to become a bank holding company regulated by the Federal Reserve… As of Wednesday, GMAC had received 58% of existing, eligible GMAC debt securities and 38% of outstanding debt securities of ResCap (as the mortgage unit is also known) — little changed from late Tuesday. Around 75% of the selected securities must be tendered for the proposed debt restructuring to succeed in raising capital that would go toward satisfying GMAC’s conditions to become a bank holding company.” Those plans took a major hit today…

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From GM’s FastLane Blog: “We’ve been very proud of and grateful for the support and encouragement we’ve received from so many in the business community recently, especially locally here in Michigan. Jim Hiller, CEO of Hiller’s Markets, recently wrote this post on his corporate blog in which he explained why he feels it important to buy from American-based vehicle manufacturers and why he supports his community here in Michigan. We thought Mr. Hiller’s comments were worth sharing.” – Christopher Barger, Director Global Communications Technology” Excerpt:”My epiphany came as I stood on slick-top pavement in a moon-lit night, waiting for my car after a fundraiser for the Juvenile Diabetes Research Foundation. I stood with General Motors Vice-Chairman Bob Lutz, watching foreign car after foreign car drive away into the rain-slicked night. He turned to me as those foreign luxury vehicles peeled out of the parking lot and said, ‘How many people realize that when they buy an American luxury vehicle, they’re providing work for a dozen people for at least a week?’ Before then, I hadn’t felt in my bones the direct connection between the car I drive and the people in my hometown being in, or out, of a job. Many of my friends had told me so, but I didn’t listen – friends from other countries, shaking their heads in disbelief at the thought of neglecting one’s homeland… I don’t even remember what kind of car I was driving, but the next day I bought a Cadillac STS and loved it. All of my preconceived notions that foreign cars were better-made and were longer-lasting, well, they proved untrue.”

“There’s an orderly way to do bankruptcy that produces a soft landing,” White House spokeswoman Dana Perino said today. “That’s one of the options.” As we’ve said before, the longer this goes on, the shorter the walk to bankruptcy court. Speaking of which, Bloomberg reports that “The federal bankruptcy court in Detroit, preparing for large reorganizations including possible filings by General Motors Corp., Chrysler LLC or Ford Motor Co., has changed some of its rules. Efforts to make the jurisdiction more business-friendly may prompt automakers to seek protection in their Michigan home, rather than in the traditional, big-business venues of New York and Delaware.”  The court has passed a new administrative order that empowers the chief judge to choose a bankruptcy judge for any given case (as opposed to random selection). At the same time, they’re reviewing staffing, security and technology functions, waiting for the “big one.” Or two. Or three. “There is no district in the country that has a greater stake in the outcome of a filing by one of the Big 3 than the Eastern District of Michigan,” said Chief Judge Steven Rhodes. Ironically enough, it looks like there’s one part of Motown’s business where the state will fight outsourcing.

TTAC has long predicted a supplier-led “run on the bank” scenario, whereby suppliers demand COD and destroy Chrysler, GM and (yes) Ford’s life-sustaining cash float. While the automakers have managed to stave-off that eventuality– as suppliers jostle for their position in line at the bailout buffet– it seems that Chrysler dealers are showing the same level of respect to the corporate mothership as the channel stuffing colossus has shown its dealers. The Wall Street Journal reports that “Chrysler LLC’s financing arm has warned dealers it may have to temporarily stop loans that dealers use to pay for stocking vehicles on their lots as a result of a recent wave of withdrawals from a fund used to pay off those loans. In a letter dated Dec. 12, Chrysler Financial Chief Executive Tom Gilman said dealers have been withdrawing up to $60 million a day from the fund…. Gilman said more than $1.5 billion has been withdrawn from the CMA [cash management account] fund since July.”

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Your faithful blogger is suffering this morning. A night of birthday celebration is currently proving that knowledge of moderation (and the mysteries of escrow) do not simply come with age. But compared to the hangover caused by a decade-long cheap credit binge, my suffering seems downright tolerable. Just ask GMAC. The Detroit News reports that GM’s once-captive lender has delayed the delivery date for debt swap deliveries for the fifth time, as it desperately attempts to round up enough capital to achieve bank holding status. Despite improving its offer last week, GMAC still says it needs “significant additional participation” from bondholders to make its goal of $30b in regulatory capital. Luckily the DetN is happy to sugar-coat the pain by headlining the story in as optimistic terms as possible (GMAC closer to raising enough capital to become bank holding company). And though technically true, there’s devils in them thar details.

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