GM saw Chrysler as credit booster

NEW YORK, June 15 (UPI) -- An unlikely merger between U.S. auto giants General Motors Corp. and Chrysler LLC was seen mostly as a way to raise capital from banks, court records show.

Chrysler consultant Robert Manzo at Capstone Advisory Group last year had concluded GM had more to offer the company than Fiat, Manzo said in U.S. Bankruptcy Court in New York.

But, GM adviser William Repko said GM viewed a merger as a way to convince banks to free up more cash for GM during a slump, the Detroit Free Press reported Monday.

Industry analysts Erich Merkle said at the time GM had not solved its own problems, "let alone bringing Chrysler into the mix."

Newsweek said the merger would prove the adage "two wrongs don't make a right."

But Repko said it made sense in September, when GM and Chrysler were burning through $15.8 billion $11 billion in cash, respectively.

Restructuring expert Van Conway of Conway McKenzie Inc. the collapse of the credit market in the fall of 2008 took away the advantages of a merged company.

"Once (the credit market) crashed, there was no more bank money," he said.

"On paper, before the crash, it made sense."