DETROIT -- Chryslers financial adviser now says a breakup and sale of the company would bring far less cash than he had projected four months ago.
The adviser, Robert Manzo, executive director of Capstone Advisory Group LLC also believes that only the Dodge Viper and Jeep Wrangler among Chryslers product lines could be sold separately as going concerns. Manzo previously envisioned several other models being sold as stand-alone going concerns.
Chrysler has received only limited interest from potential buyers of its factories, product lines and other assets, company executives and lawyers said in documents filed with the U.S. Bankruptcy Court yesterday.
The offers, in most cases for one plant or another, did not suggest widespread interest among potential buyers in larger portions of the automaker, they said.
Chrysler is arguing in court that its proposed sale of select parts to Italys Fiat S.p.A. is the only viable alternative for the company. Dissenting debt holders have objected to the plan, implying that the breakup and sale of the entire company might raise more cash for Chryslers creditors.
Chrysler recently offered to sell the Conner Avenue plant in Detroit, which builds the Dodge Viper sports car, for $10 million, Chrysler Chairman Bob Nardelli said in a statement.
We received no purchaser interest, Nardelli said. The market for such assets is extremely depressed at this time.
Manzo, whose financial advisory firm was hired by Chrysler, reviewed the breakup value of the company and cited examples of outside interest in Chrysler assets. In his statement, he discussed the potential values of various Chrysler assets if the company were liquidated.
On April 30, Manzo submitted to the court a liquidation analysis he had conducted on Jan. 30. On May 21, he submitted a new liquidation analysis conducted May 20. Manzo said his two assessments differ in important ways.
The latest analysis expects that in a liquidation, Chryslers main secured creditors would recover $1.2 billion at most. In his Jan. 30 analysis, Manzo predicted they would recover between $654 million and $2.6 billion.
The latest study assumes that only Chrysler is in bankruptcy, he said. If another automaker files for bankruptcy, the hypothetical recovery ranges could be significantly lower.
Manzo also said that he now sees only the Wrangler and Viper being sold as going concerns. The Jan. 30 study assumed that Chrysler also could sell the Dodge Ram and Dakota pickup lines, along with certain car lines built in Brampton, Ontario. That factory builds the Chrysler 300 and Dodge Charger and Challenger.
I have concluded that the sale of these additional car lines on a going concern basis are unlikely, he said. One reason Manzo changed his mind: He now has seen actual earnings results for 2008. Before, he was working from Chryslers forecasts.
Looking just at the Wrangler, Manzo estimated a liquidation sale could bring between $156 million and $234 million. But a potential buyer, he said, would face significant additional investment costs upwards of $1 billion.