Ford, one of Detroit’s “Big Three” car-makers, has said it will not seek a short-term loan from the US government as it is not desperate for an immediate cash injection.
It comes after congressional Democrats sent President George Bush a draft proposal for a $15bn (£10bn) short-term rescue to help General Motors and Chrysler plug a gap of least $14bn to keep operating through the end of March.
“Ford fully supports an effort to address the near-term liquidity issues of GM and Chrysler,” Ford said in a statement. “Our industry is highly interdependent and a failure of one of our competitors could affect us all.”
Ford estimates that about 80pc of its suppliers also perform work for GM and Chrysler, and has said its operations could be disrupted by a financial failure at a competitor.
American taxpayers could end up owning part of GM and Chrysler in return for advancing the short-term loan to the troubled car manufacturers.
Under draft legislation being reviewed by the White House last night, the US government would receive equity warrants equivalent to 20pc of the loans being offered in order to allow taxpayers to benefit if shares in the car makers were to rise.
The warrants form a key part of the draft legislation aimed at providing lifeline funding to GM, Chrysler and Ford, who collectively asked for $34bn in emergency funding last week.
Negotiations between the White House and Congressional leaders continued into last night, with an indication that President George W Bush would be willing to sign the bill expected before the details were to be sent to both chambers of Congress.
The bill would then need to be put to separate votes in both the House and the Senate as early as today and then be officially signed by the President before it could become law.
Other key points in the draft bill include the appointment of a “car tsar” – a White House appointee who would oversee the loans and essentially ensure that each company was carrying out whatever restructuring is necessary to be able to return to profitability.
In addition, the leading 25 managers at each company would not be allowed to receive bonuses, and no dividends could be paid while money was still owed to the taxpayer.
Many of the details are similar to those of the US government’s earlier bank bail-outs, with an interest rate of 5pc to be charged on the money for the first give years, and 9pc thereafter.
Democrat leaders last night stressed that the $15bn – which will be taken from a $25bn Department of Energy fund designed to help the trio go “green” – was all that was on offer.
House Speaker Nancy Pelosi said it may take more than $15bn to get the company’s through to the end of March, but said that she hoped there would still be a viable auto industry by that date.
“There is not going to be an endless flow of money,” she continued, adding “everybody has to take a haircut.”
Over the weekend, pressure had been placed on General Motors to consider removing chairman Rick Wagoner – a call led by Senator Christopher Dodd, in part backed-up by President-elect Barack Obama – but it is thought that the draft legislation will not stipulate the need for management changes at this stage.
However, GM was last night under pressure on a different front, amid suggestions that the influential United Auto Workers union is also seeking a stake in the company in return for making much-needed contract concessions, as well as a seat on the company’s board.
PR: 
LD: 
I: 
C: 
SD: 
