General Motors Corp. Chief Executive Officer Rick Wagoner is personally leading a lobbying push for federal aid as the biggest US automaker seeks to merge with Chrysler LLC, people close to the discussions said.
His involvement includes attending meetings, such as one with Treasury Department officials last week in Washington, said the people, who asked not to be identified because the talks are private. GM has asked for government funds to help combine with Cerberus Capital Management LP's Chrysler, people have said.
Wagoner, 55, was in Washington as recently as yesterday, the people said.
GM is among automakers eligible for $25 billion in low- interest borrowing to retool plants, while auto lenders may get funding from the $700 billion bailout fund to buy bad home loans and other troubled assets. GM may want $10 billion in government aid, two people familiar with the discussions said.
Treasury Secretary Henry Paulson would prefer any funding for Detroit-based GM come from the low-interest loans, not the $700 billion banking-system rescue, people familiar with the matter have said.
GM, Cerberus and Chrysler have declined to comment on their talks, which come as the global credit crunch threatens to shrink sales in their home market this year to the lowest level since 1993.
GM has lost almost $70 billion since 2004, while Auburn Hills, Michigan-based Chrysler indicated its first-half loss exceeded $1.08 billion.
Dana Perino, a White House spokeswoman, declined to comment yesterday on what if any aid might be available to help a tie-up between GM and Chrysler, the third-largest U.S. automaker.
“Nobody wants to see the auto industry go under,'' U.S. Senator Charles Schumer, a New York Democrat and the Banking Committee chairman, said in a Bloomberg Television interview. “If there's some thought about doing other things for auto companies, we'd be open to it.''
Wagoner took the top spot at GM in 2000, making him the longest-serving CEO at a U.S. automaker. GM shares reached a record $96.63 in April 2000, shortly before he took the helm. They fell to $4.76, the lowest since 1950, on Oct. 9 as the U.S. auto-sales outlook worsened.
GM slid 50 cents, or 8.4 percent, to $5.45 yesterday in New York Stock Exchange composite trading. The shares have tumbled 78 percent this year, the worst performance among the 30 companies in the Dow Jones Industrial Average.
A combined GM-Chrysler would need $10 billion to $12 billion in additional cash to integrate operations, Citigroup Global Markets Inc.'s Itay Michaeli wrote in a note to investors on Oct. 20. The New York-based analyst rates GM as “sell”.
The Energy Department is working to release $5 billion to GM through the loan program, the Wall Street Journal reported on its Web site yesterday, citing a person familiar with the matter.