Iacocca did not borrow money from Congress. The deal was to have the
government back the loans Chrysler was acquring - a co-signer, in a way.
The American government would be on the hook only if Chrysler could not
repay the loans. As it turned out, the company was able to survive and pay
back all its loans before the deadlines. And pay the government hundreds of
millions of dollars for interest and fees on moneys the feds never forked
out. The presentation of the cheque to the American govenment was not a
pleasant experience for Iacocca, all that money for services never rendered,
but the federal finance department loved it.
The Prudential loan was money that permitted Chrysler to expand. Instead of
getting money from a dozen or more different banks and lenders, Chrysler had
one loan from one lender. The money permitted Chrysler to tool the all-new
1957 models, produce the B and RB engines, design and tool the new unibody
1960 cars, plus permit a major expansion and updating of their factories.
Such projects included the new St.Louis assembly plant to replace the aging
Evansville plant, a new aluminum diecasting plant in Kokomo, IN, a new plant
in Indianapolis to build Chrysler-designed electrical components. converting
the DeSoto stamping plant for the production of glass, and expansion outside
North America - acquire an interest in Simca (France), plants in Rotterdam,
Havana, Capetown, and control of the South African and Mexican opeations.
Chrysler could have survived without Prudential, but the late 1950's would
have been very boring. Prudential, by the way, had experience with auto
companies. They had been financing the Rootes brothers in Britain since
the 1920's. Chrysler would acquire the Rootes organization in the 1960's.
Bill
Vancouver, BC
----- Original Message -----
From: Tommy Taylor
To: L-FORWARDLOOK@xxxxxxxxxxxxx
Sent: Wednesday, January 17, 2007 2:39 AM
Subject: [FWDLK] Chrysler Bail out number one
We all know the story of Lee Iacocca going to congress to borrow funds to
keep Chrysler afloat. This is not the first time Chrysler had to be helped
out to keep running. In 1954, before the Exner era and to facilitate the
money needed to retool into the Forward Look series, the corporation
borrowed $250 million from Prudential. We all know how it turned out but
that was of interest to me since I retired from Pru. That was a lot of
money back then.
Tom Taylor
55 Dodge
*************************************************************
To unsubscribe or set your subscription options, please go to
http://lists.psu.edu/cgi-bin/wa?SUBED1=l-forwardlook&A=1
|
|
Back to the Home of the Forward Look Network