No takers for Viper means sales of other Chrysler and GM brands are difficult, if not impossible.
In a bankruptcy court filing Robert Nardelli, CEO of Chrysler LLC, says that the company recently offered for sale its entire Conner Avenue plant in Detroit, the facility that manufactures Dodge Vipers and engines, and the entire Viper business for only $10 million.
The 392,000 square-foot plant occupies 27 acres where 115 employees assemble the Dodge Viper SRT10 Coupe and Roadster and their V-10 engine. The Viper business earned $16 million in 2008.
Chrysler received “no purchaser interest,” in what amounted to a fire sale of the sports car line.
The lack of any interest whatsoever demonstrates just how depressed the market is for automotive assets of any kind, and it has direct implications for General Motors as it struggles to sell its Saturn, Opel, Saab, and Hummer brands to raise cash and trim its bloated product portfolio.
One of the core arguments of bondholders, who oppose the U.S. Treasury Department imposed restructurings of both companies, is that they would be better off if the companies were broken up. If there are no buyers ,then this speculative assertion is demonstrably false, legally allowing the proposed restructurings to go forward.
A hearing is going on right now in the U.S. Bankruptcy Court in New York as to whether Fiat’s takeover of Chrysler can proceed by transferring Chrysler assets to the Turin-based small car maker over the objections of bondholders and other creditors.
It is Nardelli’s sworn testimony that the objecting bondholders “simply ignore the fact that the U.S. Treasury Department was the only lender willing to invest in us. As credit markets tightened and automotive sales deteriorated in the fall of 2008, Chrysler suffered a severe liquidity crisis. We were unable to obtain financing from banks or other traditional sources. As a result, and as a last resort, Chrysler approached the United States government for financial support,” Nardelli said.
The 25,000th Dodge Viper rolls off the line at Chrysler LLC's Conner Avenue Assembly Plant.
It was the Treasury Department, through its Auto Task Force, that then imposed the viability terms, including the debt-for-equity swap that the bondholders are objecting to.
“Based on my management team’s expertise and business acumen, the work product of our advisors (which included a fairness opinion and liquidation analysis), and the notion and hope that Chrysler could continue and perhaps return to profitability, we chose the Sale (to Fiat) over liquidation,” said Nardelli.
“While we all wish that customer demand would have increased drastically in time to provide us the liquidity we so desperately needed, it simply did not happen. Faced with the choices presented and the information before me, I am confident that approving the Sale was an exercise of sound business judgment.”
“I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct,” said Nardelli.