Chrysler creditors, Treasury reach pact

Source: Detroit Free Press

Chrysler creditors, Treasury reach pact
BY JUSTIN HYDE AND GREG GARDNER • FREE PRESS BUSINESS WRITERS • APRIL 28, 2009

Chrysler's creditors and the Obama administration have reached a deal over reducing Chrysler's debt that clears a major hurdle to the company's survival, a person familiar with the accord said today.

Details of the agreement were not immediately available, but the accord appears to clear the way for Fiat S.p.A to take over Chrysler's operations and receive up to $6 billion in federal loans.

Under Chrysler's agreement with the UAW, the union's retiree health-care trust fund could own 55% of the company, with Fiat holding 35% and the government and secured creditors holding 10% each.

Secured creditors carry $6.9 billion of Chrysler's debt, which they had argued stood a better chance of recovery in bankruptcy than the $4 billion lent to Chrysler by the Treasury.

Read more: http://www.freep.com/article/20090428/BUSINESS01/90428041/Chrysler+creditors++Treasury+reach+pact

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The Detroit News posted this less than an hour ago:

Tuesday, April 28, 2009
Aides: Chrysler creditors agree to deal that could help avert bankruptcy
David Shepardson / Detroit News Washington Bureau


Washington -- The Treasury Department has reached a deal with Chrysler's secured creditors that could help the Auburn Hills automaker avoid bankruptcy, a person familiar with the matter said Tuesday.
The group of lenders led by JP Morgan, Citibank, Goldman Sachs and Morgan Stanley hold $6.9 billion in secured debt.

Several congressional officials said the creditors agreed late last night to write down the debt to $2 billion, confirming a report this morning in the Washington Post.

The creditors had sought $3.5 billon in new debt and a 40 percent equity stake in Chrysler.

A United Auto Workers agreement said that the debt holders would get a 10 percent stake in the company.

more...

http://www.detnews.com/article/20090428/AUTO01/904280405/Aides++Chrysler+creditors+agree+to+deal+that+could+help+avert+bankruptcy

Chrysler under UAW, Fiat, and US Government control certainly is a weird arrangement. It sounds like the UAW is taking a ton of risk here.

Now somebody has to figure out how they can make some cars that people actually want to buy.

"thousands of Chrysler union retirees will see their health care benefits sharply reduced"

Those people retired with the belief they would have that benefit and did not prepare for the added expense they will now have.

Us somewhat younger people know that we are going to get screwed and are trying to prepare for retirement when we have to cover these cost ourselves.

Station is www.wdiv.com

Reporter is Rod Meloni.

Local Detroit TV hasn't done a very good job reporting any of this, imo.