Investors not convinced of GM-Chrysler deal

Automaker General Motors Corp. is having a tough time trying to secure the financing necessary to buy Chrysler LLC, owned by private-equity firm Cerberus Capital Management, The Wall Street Journal reported, quoting people familiar with the matter.

A new company is expected to have annual revenue exceeding $250 billion, at the same time having about 30% of the U.S. market. It is also estimated that the new entity will house about $30 billion in cash, which will improve the company's credit rating, thus lowering the risk of seeking bankruptcy protection by GM or Chrysler over the next 15 months.

However, coming together of the two companies would mean several thousands of job cuts and money is to be found for buyouts and severance packages. Several potential lenders are reportedly not convinced of investing in the current choppy economic environment.

Through the merger, GM will have access to Chrysler's rock-solid Jeep brand and minivan lineup as well as several joint ventures that Chrysler has, including deals with China's Chery Automobile Co. and Volkswagen AG.

If investors do not show interest in the deal, it is likely that the companies will approach the government and may sell a stake in the new company to the federal government, the report added. Cerberus is also in discussions with other parties for the sale of Chrysler.