WASHINGTON, May 1 (Reuters) - The U.S. Treasury Department granted Chrysler LLC $500 million in working capital on Wednesday but the loan has not been drawn down due to the automaker's bankruptcy filing, a Treasury spokeswoman said on Friday.
The working capital, which had been in the pipeline for a number of weeks, is not expected to be used during Chrysler's reorganization, Treasury spokeswoman Jenni Engebretsen said. Instead, Chrysler will draw down on $3.3 billion in debtor-in-posession financing provided by the Treasury when the company filed for Chapter 11 protection on Thursday.
The loan for Chrysler followed a by a week a similar $2 billion working capital loan for General Motors Corp., which faces a June 1 deadline to reach a restructuring plan.
In addition, the Treasury said it has set aside $280.13 million to backstop warranties on Chrysler vehicles. This reserve also is not expected to be drawn upon, Engebretsen said, as Chrysler will continue to fund its warranty costs out of debtor financing and normal operations.
A $1.5 billion loan provided by the Treasury in January to Chrysler Financial will remain in place despite the takeover of Chrysler's Financial's business by GMAC LLC. Those funds have already been loaned to Chrysler vehicle buyers, and as they are repaid, the money will be returned to the Treasury, Engebretsen said.
(Reporting by David Lawder) Keywords: AUTOS/CHRYSLER TREASURY (david.lawder@thomsonreuters.com; +1 202 898 8395; Reuters Messaging: david.lawder.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The working capital, which had been in the pipeline for a number of weeks, is not expected to be used during Chrysler's reorganization, Treasury spokeswoman Jenni Engebretsen said. Instead, Chrysler will draw down on $3.3 billion in debtor-in-posession financing provided by the Treasury when the company filed for Chapter 11 protection on Thursday.
The loan for Chrysler followed a by a week a similar $2 billion working capital loan for General Motors Corp., which faces a June 1 deadline to reach a restructuring plan.
In addition, the Treasury said it has set aside $280.13 million to backstop warranties on Chrysler vehicles. This reserve also is not expected to be drawn upon, Engebretsen said, as Chrysler will continue to fund its warranty costs out of debtor financing and normal operations.
A $1.5 billion loan provided by the Treasury in January to Chrysler Financial will remain in place despite the takeover of Chrysler's Financial's business by GMAC LLC. Those funds have already been loaned to Chrysler vehicle buyers, and as they are repaid, the money will be returned to the Treasury, Engebretsen said.
(Reporting by David Lawder) Keywords: AUTOS/CHRYSLER TREASURY (david.lawder@thomsonreuters.com; +1 202 898 8395; Reuters Messaging: david.lawder.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.