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To: Les H who wrote (168853)	12/3/2008 8:39:02 PM
From: DebtBomb	Read Replies (1) \| Respond to of 306849

Moody's downgrades GM, Chrysler, backs Ford rating Moody's downgrades GM, Chrysler ahead of Washington meeting, backs ratings for Ford Motor Wednesday December 3, 2008, 8:28 pm EST NEW YORK (AP) -- Credit ratings agency Moody's Investors Service on Wednesday downgraded its ratings for General Motors Corp. and Chrysler LLC, sending them further into non-investment, or "junk," status as the automakers' seek bailout funds from Washington. Moody's also affirmed its ratings for Ford Motor Co., but said its outlook for Ford -- and the other two automakers -- is "negative," implying further downgrades are possible. For General Motors, Moody's said it lowered its ratings to "Ca" from "Caa2," citing the increased probability of a balance-sheet restructuring that would result in a loss for current debtholders. About $43 billion of debt is affected. Moody's also lowered its ratings for privately held Chrysler to "Ca" from "Caa2," affecting about $9 billion in debt. The ratings agency noted Chrysler is highly dependent on truck and SUV segments, which have seen slumping demand as consumers shift to smaller vehicles. Chrysler reported Tuesday its U.S. sales in November plunged more than 47 percent, worse than the industry average of 37 percent. A lower credit rating implies a company is less likely to repay its debt and usually means it will cost the company more to borrow money. Ford's rating of "Caa1" was affirmed by Moody's, affecting $26 billion in debt. The automakers and their union are trying to sell a skeptical Congress on a $34 billion aid plan, promising labor concessions and restructuring in advance of a second round of hearings. Chrysler said it needed $7 billion by year's end to keep operating. GM asked for an immediate $4 billion as the first installment of a $12 billion loan, plus a $6 billion line of credit to use if conditions worsen. Ford wants a $9 billion "standby line of credit" in case a competitor fails. finance.yahoo.com

To: Les H who wrote (168853)	12/3/2008 8:52:08 PM
From: DebtBomb	Read Replies (1) \| Respond to of 306849

Senators Kyl, Corker, Warm to Detroit Bankruptcy Plan Posted by Deal Journal The Journal’s Jeffrey McCracken in New York, and Josh Mitchell in Washington, D.C. file this dispatch about the auto industry. Detroit’s automakers insist bankruptcy is not an option, but a number of U.S. lawmakers aren’t so sure. Congress members and their staffers have been meeting privately with bankruptcy experts and bankers, trying to understand the mechanics and costs of a pre-packaged or pre-arranged bankruptcy by GM, Chrysler or both. Associated Press Senator Jon Kyl Much remains in flux as Washington grapples with how to respond to the auto bankruptcy threat, but at least some top officials are embracing such an approach. Senate Minority Whip Jon Kyl, R-Ariz., said he has spoken to several colleagues from both parties who said they would be open to the government facilitating a prearranged bankruptcy for one or more of the Big Three auto makers. Mr. Kyl said he supports a plan for the government to provide financing, while also setting up an account that would guarantee warrantees for owners of cars made by companies in bankruptcy court. “I’d be happy next week to pass a bill that said for any of these three companies that go through Chapter 11, we will provide a certain amount of DIP [debtor-in-possession] financing” and money to backstop for car warrantees. “I don’t believe, in the time we have and the political climate we have, that there is an ability on the part of the unions and the three companies to make the kind of changes that would really be necessary,” Kyl said. Mr. Kyl’s approach is just one of many being considered across Congress and through Washington. One plan discussed by officials inside the U.S. Treasury is to pay out a rescue loan in stages, tying payments directly to the automakers achieving certain concessions, such as lower wages and benefits for union members or debt relief from bondholders, says one person involved in the situation. Another possibility under discussion: Structuring a conservatorship arrangement similar to the ones created for Fannie Mae and Freddie Mac, that give the U.S. government oversight over the carmakers. Meanwhile, advisers have told lawmakers of both political parties that even in bankruptcy it is unlikely GM or Chrysler could get the billions of dollars of necessary financing on their own. The government would either have to provide the money directly or guarantee the loans from banks. Estimates for that bankruptcy financing have ranged from $40 billion to $50 billion, say people involved in the talks. CEOs for GM, Chrysler and Ford Motor Co. are scheduled to be in Washington D.C. today and Friday to present their case for a federal lifeline. Most bankruptcy and turnaround experts have told lawmakers that a so-called pre-packaged bankruptcy would be unlikely. In such a bankruptcy, all of the stakeholders that are to take concessions – such as bondholders — would have to agree to them beforehand in a vote. More likely, say experts, is a structure known as a pre-arranged bankruptcy. In a pre-arranged bankruptcy large numbers of constituents like banks, bondholders and the UAW would agree to certain concessions before the filing. Other groups, such as auto dealers and parts vendors, would be dealt with in bankruptcy. A company filing a “pre-pack” typically takes 45 to 90 days to emerge from bankruptcy protection, say bankruptcy experts. A pre-arranged bankruptcy usually takes three to five months to complete. Given the complicated nature of the automakers, a filing by them could take longer. “A pre-arranged plan is more possible. And the government should backstop a DIP and maybe guarantee it if there is a shortfall,” said Deirdre Martini, a Wachovia Capital Finance managing director and former U.S. bankruptcy trustee. Ms. Martini, who now specializes on lending to restructuring companies, said she has also had several lawmakers and staffers call to “kick the tires” on bankruptcy and the Detroit automakers. “The bankruptcy code has very, very strong provisions to modify everything from labor to debt to benefits to real estate. Unfortunately, I think they may have to go in and use the code because it can do a lot for certain issues,” she said. U.S. Senator Bob Corker (R-Tenn.) says he spent recent days in New York speaking with various bankers and turnaround experts. “There are a lot of people that believe that bankruptcy is the only way that they can change the terms of so many relationshps that they have in an effective way,” said Mr. Corker. He added that some analysts have made a “very strong case” for consolidation between General Motors and Chrysler, who were in talks on a merger earlier this year. One option pitched by analysts would involve a merger of the companies followed by a pre-arranged bankruptcy for the new entity, with the government financing the process, Corker said. “The key would be creating an entity that other people would actually wish to invest in down the road,” Mr. Corker said. “I’m not going to say that’s the only option out there. I think it’s the option that probably makes people feel most comfortable.” blogs.wsj.com