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Chrysler rescue talks rev up as deadline looms

Chrysler rescue talks rev up as deadline looms
AFP
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First Published: Thu, Apr 23 2009. 02 10 PM IST
Updated: Thu, Apr 23 2009. 02 10 PM IST
Detroit: Negotiations to save Chrysler have shifted into high gear with the teetering automaker, its creditors, Italy’s Fiat and the US Treasury scrambling to thrash out a viable restructuring deal before an end-April deadline.
The Treasury Department, in the latest back-and-forth on slashing the carmaker’s debt, countered to banks and other lenders late Wednesday with a proposal that they accept 22% of the $6.9 billion they are owed, plus a 5% stake in Chrysler, the Wall Street Journal reported citing people familiar with the matter.
That was up from an earlier Treasury proposal that creditors receive 15% of the debt and no Chrysler stock — an offer rejected by the lenders.
Chrysler’s creditors, led by four major banks that have received tens of billions of dollars in US bailout funds, had countered that with a proposal to receive 65% of the debt, plus 40% of Chrysler and a seat on the board, the daily reported.
They also asked Fiat, Chrysler’s potential Italian partner, to invest cash in the US firm.
Fiat had agreed in principle to provide Chrysler with technology, but the Italian carmaker apparently has been reluctant to pump cash into Chrysler, with which it has just eight more days to seal a pact before the US auto giant faces liquidation.
Democratic Representative Gary Peters of Michigan, home state of the flagging US auto industry, said Chrysler’s creditors — major banks JP Morgan Chase, Citigroup, Goldman Sachs and Morgan Stanley, plus other investors — have not bargained in good faith.
“This is not a serious counter offer. These debt holders were offered fair market value for their debt, and the banks have responded by asking for a windfall,” said Peters.
“It is extremely disappointing that while other stakeholders have agreed to work with President (Barack) Obama to advance Chrysler’s restructuring, financial institutions that have already taken billions of dollars in taxpayer support are refusing to do the same,” he said.
Peters added that the offer was an affront to taxpayers and “the many thousands of Chrysler employees and retirees whose livelihoods hang in the balance of the outcome of these negotiations.”
Michigan’s Congressional delegation and Governor Jennifer Granholm are attempting to use their political influence to keep both Chrysler and General Motors intact.
The state’s eight Democratic congressmen and the senators met with White House chief of staff Rahm Emanuel and Obama’s chief economic adviser Larry Summers Wednesday at the White House to discuss the ongoing restructuring of Chrysler and GM.
“With the deadline for Chrysler set for April 30, we discussed the positive opportunity presented by the alliance with Fiat and our commitment to pursuing that result,” the delegation said in a statement after the meeting.
“We spoke frankly about our very serious concerns about bankruptcy for Chrysler and GM, and the administration spoke frankly about their continued efforts to see Chrysler and GM emerge from restructuring through an out-of-court process.”
The delegation said the government was “working diligently” to avoid bankruptcy, but that “the administration and the companies must continue to prepare contingency plans to avoid liquidation or a protracted restructuring process should the ongoing negotiations for out-of-court resolution fail.”
Chrysler also still has to reach a new agreement with both the United Auto Workers and Canadian Auto Workers ahead of next week’s deadline.
UAW President Ron Gettelfinger said Wednesday that talks with Chrysler and Fiat are ongoing but that contrary to some media reports, no agreement had been finalized.
“We are continuing to work towards an agreement that will be in the best interests of Chrysler workers, retirees and the communities where the company does business,” Gettelfinger said.
GM and Chrysler have received a combined $17.4 billion in public aid since December, in an effort to stave off collapse as the world’s largest
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First Published: Thu, Apr 23 2009. 02 10 PM IST
More Topics: Chrysler | Auto | US | Fiat | Treasury department |