General Motors gets $4 billion US government loan, Chrysler still in talks

01 January 2009

General Motors Corporation (GM) on Wednesday received $4 billion from the US government, the first tranche of a $13.4-billion emergency loan package, even as the treasury held back a parallel rescue package for Chrysler LLC.

Talks, however, are continuing on a similar loan to Chrysler and the treasury is expected to finalise the loan soon, company sources said.

GM will receive an additional $5.4 billion in the middle of January and would be eligible for another $4 billion in February - a total of $13.4 billion.

Chrysler sources, meanwhile, said discussions over the loan have been positive and productive and a deal was likely in the near future.

The treasury had also disbursed $6 billion to GMAC, the automotive finance company aligned with GM.  GMAC is now 51-per cent owned by Cerberus Capital Management, the private equity firm that also owns Chrysler.

The two carmakers together are expected to receive $17.4 billion in loan assistance. Money will come from the $770 billion government bail-out fund originally prepared for the failed banks and financial institutions.