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Treasury Department produces new offer to Chrysler’s lenders
2009-04-23 17:24:43 (GMT) (Caymanmama.com - Automotive Business News)
The Treasury Department has come up with a new offer to extend to Chrysler LLC’s lenders
Boston, Massachusetts (CaymanMama.com) — The Treasury Department has come up with a new offer to extend to Chrysler LLC’s lenders, asking banks and hedge funds that currently have $6.9 billion in debt to forgive $5.4 billion and accept a 5 percent stake in a Chrysler-Fiat alliance, as per two sources familiar with the matter.
The offer was made to the lenders late Tuesday, the sources said, asking to remain anonymous because the negotiations are private.
The Treasury Department produced a revised proposal in response to the lenders’ previous offer to forgive $4.5 billion in the automaker’s debt in exchange for a 40-percent stake in the alliance.
A Chrysler spokeswoman declined to comment.
The Treasury is currently in negotiations with lenders as Chrysler hurries to meet a government-imposed April 30 deadline to trade out debt for equity, lower labor costs and come to an alliance with Italy’s Fiat Group SpA.
According to the Associated Press, “The Auburn Hills, Mich., automaker is living on $4 billion in federal loans and could get another $500 million in working capital to survive through April. But without massive restructuring and a deal with Fiat, Chrysler won’t get any more aid, government officials have said.”
The Obama administration will give an additional $6 billion in government aid funding to Chrysler if the company meets the April 30 deadline. If Chrysler is unable to do so, bailout aid will cease and Chrysler likely faces liquidation.
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