Click here for a PDF of the Corporate/Finance, Insolvency & Restructuring Alert - Treasury Department Officially Launches Auto Suppliers Support Program
Today (April 8, 2009), the U.S. Treasury Department launched the Auto Supplier Support Program, a $5 billion program to guarantee receivables owed to auto parts suppliers. The purpose of the program is to restore credit flows in this industry so that suppliers can continue producing parts and automakers can have access to the parts they need.
The funding is available to any automaker that chooses to participate. So far, that includes General Motors and Chrysler LLC. The Ford Motor Company has elected not to participate. The Treasury did not give any details on how much each company will receive, but it is estimated that General Motors will have access to $2 billion and Chrysler will receive $1.5 billion.
The Auto Supplier Support Program applies to U.S.-based suppliers and only to parts shipped after March 19, 2009. Because automakers are distributing the funding, they will determine which suppliers and parts are eligible.
Auto suppliers interested in participating in the program should contact Chrysler and General Motors directly. Chrysler is pairing with Citibank to administer its implementation of the program. Interested auto suppliers should contact Christopher Choi at Citibank (direct: 212-816-5982, or toll-free: 800-236-1352; e-mail: firstname.lastname@example.org).
Under the program, suppliers have two options: (1.) Insurance of Chrysler’s accounts receivable or, (2.) accelerated payment of Chrysler’s accounts receivable. The cost of the insurance option is 2 percent of each invoice, and the cost of the accelerated payment option is 3 percent of each invoice.
As of this release, General Motors had not announced specific details or contact information for their program.
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