The senior lenders to Chrysler are planning to make a counteroffer to the Treasury Department this week, pushing back on a debt-reduction plan they say is too coercive, people briefed on the matter said Monday.
The Treasury Department has asked these lenders, which consist of banks and hedge funds, to reduce their $6.9 billion in debt holdings to about $1 billion. The goal is to help preserve Chrysler’s financial viability as it pursues a merger with Fiat, the Italian carmaker.
The banks contend the Treasury’s plan offers no concessions in exchange for a nearly 86 percent reduction in the value of their holdings. A steering committee of eight of these firms is now deciding whether to ask for equity in a combined Chrysler-Fiat, one of these people said.
The Obama administration has given Chrysler until April 30 to reach a deal with Fiat. Its auto task force is preparing for the possibility the company will not succeed and be forced into bankruptcy protection and, potentially, liquidation.
Representatives for Treasury and the bank group declined to comment.
Any attempt to restructure Chrysler is far more dependent on winning the support of the lenders than similar efforts to reorganize General Motors. The sale of Chrysler to Cerberus Capital Management in 2007 added a mountain of debt, much of which is secured by assets of the carmaker, like plants and brands.
Should Chrysler be forced to liquidate, these senior secured lenders would have claims on the assets. Bondholders in G.M. hold unsecured debt, and would likely be crushed if it were pushed into bankruptcy.
The Treasury Department did not give the creditors’ committee information about the data underpinning its proposal until late Sunday night, these people said. Included were many of the numbers behind the government’s assumptions, as well as information about what a Chrysler-Fiat deal would look like.
Among the major complaints by the creditors’ committee is that, unlike in the negotiations with G.M. creditors, these firms are not being offered any upside in exchange for cutting their debt, one of the people briefed on the matter said. G.M. bondholders were previously offered a combination of cash, stock and new debt in exchange for cuts to the value of their holdings.
The lenders’ steering committee had consisted of four major banks — JPMorgan Chase, Citigroup, Goldman Sachs and Morgan Stanley — and Elliott Management, a hedge fund. The group has been expanded to include Oppenheimer, Stairway Capital Management and Perella Weinberg Partners.
Bolded for HYPOCRITICAL, notice many of them are the same f'ing jackoffs who took huge amounts of government money and are begging, and looks like they just might get, the government to buy off huge amounts of their own junk assed investments that are worthless now.
Seems it isn't just homeowners these big financial companies are screwing, they are trying to take it right to Chrysler also. It is okay for them to write off debt that the treasury department is buying off, but ask them to lower down debt owed to them by Chrysler and they balk???
MILAN (Reuters) — The chief executive of Fiat, facing a two-week deadline to work out a partnership with his rival Chrysler, warned the unions of the troubled carmaker that he would ditch the idea unless they agreed to cut labor costs.
In a clear message to American and Canadian unions, the chief executive, Sergio Marchionne, told Wednesday’s Globe and Mail newspaper that a deal on the partnership had only a 50-50 chance of succeeding because of lack of progress in talks with union leaders.
“Absolutely we are prepared to walk,” Mr. Marchionne said in an interview.
“There is no doubt in my mind.”
The Chrysler unions had to agree to match the lower labor costs of plants run by Japanese and German carmakers in the United States and Canada, he said.
An analyst at Nomura, Michael Tyndall, said Mr. Marchionne was probably not bluffing in talking tough with the unions.
“He’s playing hardball,” he said, adding that the unions’ position would make the deal too costly for Fiat.
Under the latest version of the proposed partnership, first announced in January, Fiat would take an initial 20 percent stake in Chrysler in exchange for the technology to make small cars and access to foreign markets.
The two carmakers are under pressure to reach a deal on the proposal with Chrysler’s unions and bondholders before an April 30 deadline set by the United States government.
Chrysler has been warned by Washington that it will go into bankruptcy if it fails to complete the deal, intended to save the smallest of Detroit’s Big Three car makers.
But its lenders have so far refused efforts to eliminate most — if not all — of the $7 billion owed to them.
If a deal is reached, Chrysler would get at least $6 billion in extra government financing, having received $4 billion so far.
Fiat would get access to the American market and gain the scale it needs to survive the worst industry crisis in decades. It would bring its popular Cinquecento car to North America next year, while its premium Alfa Romeo brand would make cars in Canada or the United States, Mr. Marchionne said.
Short of having Fiat inject cash into Chrysler, Mr. Marchionne vowed to do whatever it took to save Chrysler, including becoming chief executive.
“Fundamentally, that’s possible, but the title isn’t important,” he said. “What’s important is that they hear me.”
He expected some of Chrysler’s plants to close under the partnership.
Well, I wonder if the unions are willing to concede to cuts? Hell at this point I think they ought to just consider firing all the union workers and bringing in new help, God knows there are plenty of unemployed people out there willing to do factory work for 25,000 a year, which is what you should make working in a factory.
I just came back from a visit at my friendly, neighborhood, Ford dealership.
2010 Mustang GT. 2010 Fusion Sport AWD. 2010 Lincoln MKZ.
Seriously, these are phenominal cars compared to what Ford has had previously. How they've gone in such little time from really mediocre and crap product (500, Freestyle, etc) to what they have now and in the pipe is just... just... mindblowing. I cannot wait to see the 2010 Taurus now, let alone the SHO.
Checkmate. GM, Chrysler... you guys still playing?
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"This car is 100% sh*ts and giggles."A car can be a tool but it can also be so much more. It can be a heart-starter, it can be a drug, it can be a piece of art and it can stir your soul.
"Speed has never killed anyone. Suddenly becoming stationary... that's what gets you." Jeremy Clarkson
Last edited by toasteroven : 04-16-2009 at 09:44 PM.
I can't wait to drive a 2010 Mustang. Although it may be time for me to pick up a 2009 Wrangler... I was hoping for the Phoenix V6 =(
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Quote: Originally Posted by edgeandink
The reason they can put down decent 1/4mile times is mostly in part to the solid rear axel and its ability to hook and go. But we all know that doesnt mean crap from a dig.
Honestly, the GNx is going to be ugly, imo. And it's in China, I don't think we're going to get it here; either way the Audi wins in the looks category.
I wonder if they're actually going to make the Hornet.. <_<
I are still waiting.
I just came back from a visit at my friendly, neighborhood, Ford dealership.
2010 Mustang GT. 2010 Fusion Sport AWD. 2010 Lincoln MKZ.
Seriously, these are phenominal cars compared to what Ford has had previously. How they've gone in such little time from really mediocre and crap product (500, Freestyle, etc) to what they have now and in the pipe is just... just... mindblowing. I cannot wait to see the 2010 Taurus now, let alone the SHO.
Checkmate. GM, Chrysler... you guys still playing?
Ford is on an absolute roll.
Between the 2010 Mustang, SHO Taurus and 41 MPG Fusion Hybrid, how can you not be excited about Ford (NEVER thought I'd say that).
Meanwhile.....are Camaro's on dealer lots yet?
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Quote: Originally Posted by sphipps
Obviously you are not detecting the sarcasim in my posts.
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