Chrysler Says $5 Billion In Low-Interest Loans Will Be Enough

Chrysler LLC won't need additional federal funding to run its operations if it succeeds in securing $5 billion in low-interest loans by the end of the month.

The $5 billion will help Chrysler work through the crucial July shutdown period when U.S. auto makers traditionally idle their plants for up to two weeks to retool their factories, a company spokeswoman said.

The Associated Press reported earlier Saturday that Chrysler Chief Financial Officer Ron Kolka said Chrysler would need additional government loans or face a cash shortage in July. Kolka, Chrysler said, was explaining when the next large cash usage would occur.

Chrysler, which has already received $4 billion in low-interest loans, told the U.S. Department of Treasury in February that it needed only another $5 billion in order to avoid bankruptcy. The auto maker is slated to submit a plan on March 31 that details its cost-cutting actions and how it intends to repay the loans.

Chrysler and General Motors Corp. (GM), which also needs more low-interest loan money, are both in cost-concession negotiations with the United Auto Workers. The UAW ratified an agreement with Ford Motor Co. (F) - which hasn't accessed the loans - is expected to save the auto maker $500 million annually.

Kolka told the Associated Press that Chrysler's will succeed at reaching a deal with the UAW that will comply with the terms of the government loans. The auto maker must lower its hourly labor costs to close the wage gap with the U.S.-based plants operates by its Japanese competitors.

-By Jeff Bennett; Dow Jones Newswires; 248-204-5542; [e-mail]