Reuters – Chrysler LLC is rapidly burning through cash and being driven to prepare for a possible break-up if it can’t clinch a merger with General Motors Corp or get government funding needed to ride out the economic crisis, people with knowledge of the situation said.

Without new funding or a wrenching restructuring, executives have raised concern about the automaker’s ability to finance its operations from existing cash beyond the first half of 2009, said the sources, who were not authorized to discuss Chrysler’s performance.

Chrysler has had to pay out over $100 million a month to support strained suppliers on top of a total $200 million support to sales through dealers in August and September as it suspended vehicle lease financing, the sources said.

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New York (HedgeCo.Net) – CSX is finding themselves in the middle of another battle, this time with a shareholder who is suing the railroad company along with hedge funds TCI and 3G Capital Partners.

Shareholder Deborah Donoghue is seeking the recovery of “short swing” profits from sales conducted by the two hedge funds between August and September 2007. She is hoping to recover profits from the sale of shares by the funds, before they announced their plan to launch a proxy battle and shake up the Board of Directors.

Donoghue is claiming that TCI and 3G sold 2 million shares of CSX stock and within six months, bought a large amount of shares and derivatives equal to shares of CSX common stock at lower prices.

“Such profits are recoverable on behalf of CSX by plaintiff as a shareholder of CSX, the latter having failed or refused to act in its own right and for its own benefit,” stated the complaint.

Donoghue isn’t the only one who believes the hedge funds didn’t act in good faith.  CSX has been in a battle with the two funds ever since they exerted their controlling stakes to take over four board seats on the Jacksonville, Florida based company after a drawn out proxy battle.

CSX had argued that the funds “secretly coordinated” their fight to gain the seats on the board while failing to disclose their full stake in the company.  The judge eventually ruled with the hedge funds, allowing them to vote their shares at the company’s annual meeting in June.

Hedge funds are not required to report to the Securities and Exchange Commission, thus these “short-swing” profits were not publicized.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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CNNMoney.com – A shareholder has sued CSX Corp. (CSX) and two hedge funds over sales of CSX shares before the funds publicly disclosed plans to shake up the railroad operator’s board in a proxy fight earlier this year.

The lawsuit, filed in U.S. District Court in Manhattan on Tuesday, is seeking recovery of so-called "short-swing" profits related to sales by The Children’s Investment Fund Management LLP, or TCI; 3G Capital Partners LP and their principals between August and September 2007 on behalf of the company and its shareholders. CSX is a nominal defendant in the case.

The complaint alleges the funds or their principals purchased large numbers of shares and derivatives equivalent to CSX shares within six months of their prior share sales and at lower prices.

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Tags: asset-management, brian-l-roberts, civil-penalties, client-expectations, embarrassment, general-electric-co, img-src, industry-experience, japanese-government, mapeley, outsiders, public-offering, railroad-experience, standalone-basis, university-of-texas, us-congress