Fiat deal very close
04-29-2009, 02:54 PM
#1
Senior Member
Thread Starter
Join Date: Mar 2006
Location:
Posts: 2,755
Likes: 0
Received 0 Likes
on
0 Posts
Fiat deal very close
Associated Press 4-29-09 (references in article to "today" mean Thursday, 4-30):
By TOM KRISHER
Associated Press
DETROIT — Italian automaker Fiat Group SpA will sign paperwork to become a partner with Chrysler LLC by today, according to three people briefed on the deal.
The partnership is the last piece of a huge restructuring plan needed to keep Chrysler alive as it approaches today’s government deadline to cut labor costs, slash debt and take on a partner.
The people said Wednesday that despite the partnership, Chrysler could still wind up under Chapter 11 bankruptcy protection for a short time if some creditors don’t agree to reduce their debt. But they said the government would agree to finance the restructuring rather than cut off Chrysler’s aid and leave it destined for liquidation.
All of the people spoke on condition of anonymity because the partnership agreement had not been announced.
One of the people said Fiat initially would take a 20 percent stake in the company in exchange for its small-car and engine technology. Initially Fiat would not invest any cash, but its technology is worth $8 billion to $10 billion, the person said.
Fiat’s stake could rise to 35 percent, and the company may be willing to invest money at a later date, the person said.
President Barack Obama, speaking at a town-hall style event near St. Louis, said earlier Wednesday that he didn’t know if a deal to save Chrysler would be completed.
“We’re hoping that you can get a merger where the taxpayers will put in some money to sweeten the deal but, ultimately, the goal is we get out of the business of building cars, and Chrysler goes and starts creating the cars that consumers want,” he said.
Chrysler has borrowed $4 billion from the government since the beginning of the year and could soon be in danger of running out of cash without more help. The government in March rejected Chrysler’s restructuring plan and gave it 30 days to make another effort.
On Sunday, the Canadian Auto Workers ratified concessions to the automaker, and the United Auto Workers in the U.S. reached a tentative cost-cutting deal that members will finish voting on by Wednesday night. Factory-level union leaders voted unanimously Monday night to recommend approval of the concessions.
Then on Tuesday, four major banks that hold 70 percent of Chrysler’s $6.9 billion in secured debt agreed to a deal that would erase the debt for $2 billion in cash. But 46 hedge funds that hold the remainder of the debt have refused to go along, leading to further negotiations.
The people familiar with the deal said that if the hedge funds don’t agree, Chrysler could go into a short “surgical” bankruptcy under Section 363 of the bankruptcy code. The smaller lenders would have little power to stop the debt from being restructured in bankruptcy court, since the lenders holding the majority of the debt are on board with the plan, the people said.
If an agreement is reached, Chrysler would restructure outside of bankruptcy with government help, they said.
Fiat spokesman Gualberto Ranieri declined to comment on the deal, and messages were left with a Chrysler spokeswoman.
Chrysler LLC Chief Executive Robert Nardelli said Wednesday in an e-mail to employees that the automaker was making progress toward meeting the government’s restructuring requirements.
He pointed to the deal with debtholders and the UAW deal.
“I’m encouraged by this progress and I want you to know I deeply appreciate the sacrifices made by so many constituents to help us reach the restructuring targets established by the government,” Nardelli wrote.
UAW members are expected to approve the contract concessions, which include taking a 55 percent stake in Chrysler in exchange for about $6 billion of the $10.6 billion Chrysler must pay into a union-run trust that will take over retiree health care costs.
By TOM KRISHER
Associated Press
DETROIT — Italian automaker Fiat Group SpA will sign paperwork to become a partner with Chrysler LLC by today, according to three people briefed on the deal.
The partnership is the last piece of a huge restructuring plan needed to keep Chrysler alive as it approaches today’s government deadline to cut labor costs, slash debt and take on a partner.
The people said Wednesday that despite the partnership, Chrysler could still wind up under Chapter 11 bankruptcy protection for a short time if some creditors don’t agree to reduce their debt. But they said the government would agree to finance the restructuring rather than cut off Chrysler’s aid and leave it destined for liquidation.
All of the people spoke on condition of anonymity because the partnership agreement had not been announced.
One of the people said Fiat initially would take a 20 percent stake in the company in exchange for its small-car and engine technology. Initially Fiat would not invest any cash, but its technology is worth $8 billion to $10 billion, the person said.
Fiat’s stake could rise to 35 percent, and the company may be willing to invest money at a later date, the person said.
President Barack Obama, speaking at a town-hall style event near St. Louis, said earlier Wednesday that he didn’t know if a deal to save Chrysler would be completed.
“We’re hoping that you can get a merger where the taxpayers will put in some money to sweeten the deal but, ultimately, the goal is we get out of the business of building cars, and Chrysler goes and starts creating the cars that consumers want,” he said.
Chrysler has borrowed $4 billion from the government since the beginning of the year and could soon be in danger of running out of cash without more help. The government in March rejected Chrysler’s restructuring plan and gave it 30 days to make another effort.
On Sunday, the Canadian Auto Workers ratified concessions to the automaker, and the United Auto Workers in the U.S. reached a tentative cost-cutting deal that members will finish voting on by Wednesday night. Factory-level union leaders voted unanimously Monday night to recommend approval of the concessions.
Then on Tuesday, four major banks that hold 70 percent of Chrysler’s $6.9 billion in secured debt agreed to a deal that would erase the debt for $2 billion in cash. But 46 hedge funds that hold the remainder of the debt have refused to go along, leading to further negotiations.
The people familiar with the deal said that if the hedge funds don’t agree, Chrysler could go into a short “surgical” bankruptcy under Section 363 of the bankruptcy code. The smaller lenders would have little power to stop the debt from being restructured in bankruptcy court, since the lenders holding the majority of the debt are on board with the plan, the people said.
If an agreement is reached, Chrysler would restructure outside of bankruptcy with government help, they said.
Fiat spokesman Gualberto Ranieri declined to comment on the deal, and messages were left with a Chrysler spokeswoman.
Chrysler LLC Chief Executive Robert Nardelli said Wednesday in an e-mail to employees that the automaker was making progress toward meeting the government’s restructuring requirements.
He pointed to the deal with debtholders and the UAW deal.
“I’m encouraged by this progress and I want you to know I deeply appreciate the sacrifices made by so many constituents to help us reach the restructuring targets established by the government,” Nardelli wrote.
UAW members are expected to approve the contract concessions, which include taking a 55 percent stake in Chrysler in exchange for about $6 billion of the $10.6 billion Chrysler must pay into a union-run trust that will take over retiree health care costs.
04-30-2009, 06:21 AM
#2
Member
Join Date: Apr 2009
Posts: 91
Likes: 0
Received 0 Likes
on
0 Posts
What happens if they go Bankrupt ?
My worry right now is if I pick up my new Challenger in two weeks, do I have the warranty on it ?I purchased a Jeep last year with the liftime warranty and I purchased the wrap on it to cover all other items for the life of the car. Do I lose these things ?
The news today was not good on the merger and give me pause to think. Any news on this in the forum ?
04-30-2009, 06:39 AM
#3
Member
Join Date: Mar 2009
Location: PA
Posts: 91
Likes: 0
Received 0 Likes
on
0 Posts
04-30-2009, 11:46 AM
#4
Senior Member
Thread Starter
Join Date: Mar 2006
Location:
Posts: 2,755
Likes: 0
Received 0 Likes
on
0 Posts
This is the best news in the Wall Street Journal article:
They ruled out the possibility that Chrysler could end up being liquidated and sold off in pieces.
They ruled out the possibility that Chrysler could end up being liquidated and sold off in pieces.
Thread
Thread Starter
Forum
Replies
Last Post
Jeremiah 29:11
Challenger News
0
06-11-2009 04:17 AM