Chrysler keeps silent over alleged Bundesbank plea

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The Independent Online
OFFICIALS of Chrysler Corporation and the US Federal Reserve refused to comment yesterday on a report that the struggling car maker had asked the Fed's chairman, Alan Greenspan, to intervene with the Bundesbank on its behalf.

Chrysler's finance subsidiary is struggling to win approval from its 152 lenders for a dollars 6.8bn refinancing.

The scheme is considered crucial to the survival of the company, which is America's third largest car manufacturer.

Mr Greenspan was reportedly asked to intercede with the central bank in Bonn to bring pressure on an unidentified German bank, which was holding out against the deal.

Chrysler's balance sheet is in such bad shape that the company can borrow publicly only at junk bond rates.

It will have to pay a substantial premium to the banks for the new loan, which it needs to finance vehicle leasing, fleet sales and customer loans.

The company has also suffered from a dispute with its largest shareholder, Kirk Kerkorian, over the eventual role of Lee Iacocca, who retires as chairman at the end of the year.

Chrysler's reputation, however, has strengthened recently after announcing a strong new line of cars and trucks and reporting unexpectedly good results for the second quarter. But in midday trading yesterday the company's shares had retreated 62.5 cents to dollars 20.25.

(Photograph omitted)

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