Treasury Prepares Chrysler Bankruptcy as GM Nears Deadline To
04-24-2009, 06:05 AM
#1
2nd Gear Member
Thread Starter
Join Date: Mar 2008
Location: Stang Island, NY
Posts: 242
Treasury Prepares Chrysler Bankruptcy as GM Nears Deadline To
Treasury Prepares Chrysler Bankruptcy as GM Nears Deadline Too
Share | Email | Print | A A A
By Brian Faler and Mike Ramsey
April 24 (Bloomberg) -- The U.S. Treasury Department is preparing a bankruptcy filing for Chrysler LLC only as a matter of “due diligence,” Michigan Senator Debbie Stabenow said in an interview.
“They are preparing all options,” Stabenow, a Democrat, said yesterday in Washington. The senator said she was told April 22 the filing was being readied.
Time is dwindling for Auburn Hills, Michigan-based Chrysler to reorganize outside of bankruptcy. It has until April 30 to seal an alliance with Italian automaker Fiat SpA, get its banks to agree to cut its debt and reach agreements with the United Auto Workers and Canadian Auto Workers unions on labor cost reductions.
“This is very serious, we’re coming down to the deadline,” Stabenow said.
Chrysler, surviving with $4 billion in U.S. loans, must win concessions and create the alliance to qualify for up to $6 billion more in loans.
It shouldn’t be a surprise that the administration is planning for contingencies while trying to bring Chrysler and Fiat into a working partnership, said an administration official, who declined to be identified discussing the planning.
Democrats’ Meeting
Stabenow was among 10 Democrats from the Michigan congressional delegation who met April 22 with Rahm Emanuel, the White House chief of staff, and Larry Summers, director of the National Economic Council.
“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,” the congressional delegation said in a statement after the meeting.
Chrysler was nearing completion of a labor deal with the CAW yesterday afternoon, said Ken Lewenza, president of the Toronto-based union. Chrysler has been seeking to reduce labor costs to C$57 an hour from $76 an hour to match those of Toyota Motor Corp. in Canada.
Chrysler also has substantially completed negotiations with the UAW on a new labor contract, a person with direct knowledge of the talks said.
The last major obstacle is reducing Chrysler’s bank debt. A group of lenders hold $6.9 billion in loans secured by the auto company’s assets. The Treasury and the lenders have been trading proposals for reducing the debt.
The lender group is working on a counteroffer and may submit it today.
Back And Forth
Treasury most recently asked the lenders to cut their loans to $1.5 billion and accept a 5 percent ownership stake in Chrysler. The lenders had asked for a 40 percent stake to cut the debt to $4.5 billion and asked for Fiat to contribute cash into Chrysler.
Chrysler is 80 percent-owned by the New York-based investment firm Cerberus Capital Management LP.
GM, carrying $13.4 billion in U.S. loans, is trying to finish a plan this week that may close plants and scrap models as much as four years sooner. The aim is to lower the level of sales required to make a profit as it submits a new debt-cutting proposal to unsecured bondholders as early as April 27, people familiar with the effort said.
The cuts may mean GM can be profitable in a U.S. market with as few as 10 million annual auto sales, the people said. The annual rate was 9.9 million in March, after GM said Feb. 17 its break-even target was at 11.5 million to 12 million.
GM Meetings
GM executives are meeting this week with advisers to the auto task force to complete the plan, the people said.
GM and the Treasury want bondholders to accept an offer to exchange $27.5 billion in unsecured bonds for equity and accrued cash interest, the people said this week. Chief Executive Officer Fritz Henderson said last week he expects Detroit-based GM to make a new offer this month.
Separately, GM said yesterday said it will idle one Mexican and 13 U.S. assembly plants for multiple weeks to trim inventory after sales in its home market fell 49 percent this year through March.
The plan is to reduce production by 190,000 vehicles from May through July, GM said today in a statement.
To contact the reporters on this story: Brian Faler in Washington at bfaler@bloomberg.net;
Last Updated: April 24, 2009 00:01 EDT
Share | Email | Print | A A A
By Brian Faler and Mike Ramsey
April 24 (Bloomberg) -- The U.S. Treasury Department is preparing a bankruptcy filing for Chrysler LLC only as a matter of “due diligence,” Michigan Senator Debbie Stabenow said in an interview.
“They are preparing all options,” Stabenow, a Democrat, said yesterday in Washington. The senator said she was told April 22 the filing was being readied.
Time is dwindling for Auburn Hills, Michigan-based Chrysler to reorganize outside of bankruptcy. It has until April 30 to seal an alliance with Italian automaker Fiat SpA, get its banks to agree to cut its debt and reach agreements with the United Auto Workers and Canadian Auto Workers unions on labor cost reductions.
“This is very serious, we’re coming down to the deadline,” Stabenow said.
Chrysler, surviving with $4 billion in U.S. loans, must win concessions and create the alliance to qualify for up to $6 billion more in loans.
It shouldn’t be a surprise that the administration is planning for contingencies while trying to bring Chrysler and Fiat into a working partnership, said an administration official, who declined to be identified discussing the planning.
Democrats’ Meeting
Stabenow was among 10 Democrats from the Michigan congressional delegation who met April 22 with Rahm Emanuel, the White House chief of staff, and Larry Summers, director of the National Economic Council.
“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,” the congressional delegation said in a statement after the meeting.
Chrysler was nearing completion of a labor deal with the CAW yesterday afternoon, said Ken Lewenza, president of the Toronto-based union. Chrysler has been seeking to reduce labor costs to C$57 an hour from $76 an hour to match those of Toyota Motor Corp. in Canada.
Chrysler also has substantially completed negotiations with the UAW on a new labor contract, a person with direct knowledge of the talks said.
The last major obstacle is reducing Chrysler’s bank debt. A group of lenders hold $6.9 billion in loans secured by the auto company’s assets. The Treasury and the lenders have been trading proposals for reducing the debt.
The lender group is working on a counteroffer and may submit it today.
Back And Forth
Treasury most recently asked the lenders to cut their loans to $1.5 billion and accept a 5 percent ownership stake in Chrysler. The lenders had asked for a 40 percent stake to cut the debt to $4.5 billion and asked for Fiat to contribute cash into Chrysler.
Chrysler is 80 percent-owned by the New York-based investment firm Cerberus Capital Management LP.
GM, carrying $13.4 billion in U.S. loans, is trying to finish a plan this week that may close plants and scrap models as much as four years sooner. The aim is to lower the level of sales required to make a profit as it submits a new debt-cutting proposal to unsecured bondholders as early as April 27, people familiar with the effort said.
The cuts may mean GM can be profitable in a U.S. market with as few as 10 million annual auto sales, the people said. The annual rate was 9.9 million in March, after GM said Feb. 17 its break-even target was at 11.5 million to 12 million.
GM Meetings
GM executives are meeting this week with advisers to the auto task force to complete the plan, the people said.
GM and the Treasury want bondholders to accept an offer to exchange $27.5 billion in unsecured bonds for equity and accrued cash interest, the people said this week. Chief Executive Officer Fritz Henderson said last week he expects Detroit-based GM to make a new offer this month.
Separately, GM said yesterday said it will idle one Mexican and 13 U.S. assembly plants for multiple weeks to trim inventory after sales in its home market fell 49 percent this year through March.
The plan is to reduce production by 190,000 vehicles from May through July, GM said today in a statement.
To contact the reporters on this story: Brian Faler in Washington at bfaler@bloomberg.net;
Last Updated: April 24, 2009 00:01 EDT
Thread
Thread Starter
Forum
Replies
Last Post
jwog666
Pipes, Boost & Juice
11
12-27-2021 08:09 PM
MustangForums Editor
Mustang News, Concepts, Rumors & Discussion
1
09-29-2015 03:23 PM