The US Treasury said it had finalized a 4-billion-dollar emergency loan for troubled General Motors, the biggest US automaker.
The department “today finalized the loan transaction for GM and funded the first tranche of 4 billion dollars,” said Treasury spokeswoman Brookly McLaughlin.
The loan is part of a 13.4-billion-dollar rescue package the US government approved this month for GM and Chrysler to stave off collapse amid tight credit and dismal sales.
The first segment of the bailout, set to be funded before year's end, was to provide 4 billion dollars each to GM and to Chrysler, the smallest of the Big Three US automakers.
GM was to receive an additional 5.4 billion dollars in mid-January and would be eligible for a further 4 billion dollars from February pending congressional action. Treasury has also provided six billion dollars in aid to GMAC, GM's financial arm.
Under the agreement, the automakers will have to prove their viability by March 31 or the government could require the funds to be repaid within 30 days.
McLaughlin said the agency is “working expeditiously with Chrysler to finalize that transaction and we remain committed to closing it on a timeline that will meet near-term funding needs.”
Chrysler is hoping to obtain its four billion dollars from the package as soon as possible.
“We recognize the magnitude of the effort by the Treasury Department to complete these multiple financial arrangements quickly and sequentially,” Chrysler said in a statement.
“The discussions relating to Chrysler LLC have been positive and productive, and we look forward to finalizing the details of our financial assistance in the immediate future.”
The money for the auto industry injection comes from the 700-billion-dollar financial industry bailout approved earlier this year.
Ford Motor Company, the second-largest US automaker, has asked the government for a line of credit as a backstop in the face of plunging sales.
GM and Chrysler had faced a threat of imminent bankruptcy that could have created economic chaos and caused millions of job losses across the country.
