UPDATE 1-US Treasury: GM, Chrysler supplier aid launched
Wed Apr 8, 2009 11:10am ED * Government bailout of auto suppliers launched * Interested suppliers should contact GM, Chrysler * Shares of parts suppliers advance
WASHINGTON/DETROIT, April 8 (Reuters) - The U.S. Treasury
said on Wednesday that General Motors Corp (GM.N) and Chrysler
LLC have launched supplier support programs backed by up to $5
billion in U.S. government funds. The news sent shares of major auto parts makers climbing,
with American Axle & Manufacturing Holdings Inc (AXL.N) up 5
percent and ArvinMeritor Inc (ARM.N) up 13 percent. The programs will guarantee receivables owed to the auto
parts suppliers for any good shipped after March 19. Suppliers
interested in participating in the support program should
contact GM and Chrysler, the Treasury said. "The U.S. Treasury Department is pleased that both GM and
Chrysler have moved quickly to launch supplier support
programs," Treasury spokeswoman Jenni Engebretsen said in a
statement. "These efforts, backed by U.S. Treasury resources, will
help stabilize the auto supply base and restore credit flows in
a critical sector that employs more than 500,000 American
workers across the country." The Treasury did not give details on the amount being tapped
by GM and Chrysler. Sources briefed on the program told Reuters on Tuesday that
suppliers deemed critical to GM's operations have been
allocated $2.1 billion to be distributed through GM under the
bailout program. The government will supply $2 billion and GM will put in
$100 million of its own money, under a requirement that any
participating automaker should provide 5 percent matching funds
to the government money, the sources said. Suppliers are required to pay 2 percent to secure a
government guarantee of the receivables they are owed. For a
higher payment of 3 percent, suppliers can opt for immediate
payment from the fund.
(Reporting by David Lawder and Soyoung Kim; Editing by James
Dalgleish and Matthew Lewis)
