Chrysler Negotiations

[MoparDan]

The latest from the AllPar site.
http://www.allpar.com/news/index.php...ations-status/

Chrysler lenders’ counter-offer

April 24th, 2009
by DaveAdmin
The current Chrysler first-lien lenders group’s offer for to the Treasury is dropping the debt level to $3.75 billion, and 40% of Chrysler’s equity. The lenders have dropped $750 million in debt, their demand for $1 billion of their equity to be preferred equity, and their demand that Fiat invest $1 billion. This is still $2.25 billion and 35%-of-Chrysler more than the Treasury’s current offer to the lenders.
The negotiations are likely to increase in speed as deadlines loom and Chrysler and the governments wield bankruptcy as a threat against lenders and unions alike.
According to Reuters, the government’s first offer to Chrysler’s first-lien lenders was around $1 billion cash, in exchange for $7 billion in debt. The lenders countered with an offer of reducing the debt to $4.5 billon in exchange for 40% of the equity, prompting “leaks� that suggested Chrysler was planning to enter bankruptcy within one week and a Treasury counter-offer of $1.5 billion in debt and 5% of the equity in Chrysler, in exchange for the $7 billion in debt.
The lenders involved include JPMorgan Chase & Co, Morgan Stanley, Citigroup, Goldman Sachs Group, Oppenheimer Funds, Stairway Capital Management, Elliott Management, and Perella Weinberg Partners. This group is currently negotiating with the Treasury and Chrysler, with motivation for bargaining coming from the threat of a Chapter 11 bankruptcy.
Similar talks are being held with the United Auto Workers and Canadian Auto Workers, with similar leverage held by Chrysler and the two national governments.

[MoparDan]

More news released this morning via AllPar.
http://www.allpar.com/news/

[MoparDan]

There may be hope yet!

http://finance.yahoo.com/news/Chrysler-reaches-labor-deals-apf-15037136.html?sec=topStories&pos=3&asset=&ccode=

Chrysler reaches labor deals in fight for survival

Chrysler reaches deals with UAW, CAW labor unions, now needs debtholder agreement to survive

• <LI class=byline>Tom Krisher, AP Auto Writer
• On Monday April 27, 2009, 6:14 am EDT

DETROIT [[AP) -- It looks like scrappy little Chrysler LLC might yet escape the auctioneer's gavel.



The smallest U.S.-based automaker cleared two major hurdles on Sunday in its quest for survival, reaching a concession agreement with the United Auto Workers and winning ratification of its cost-cutting deal with the Canadian Auto Workers.
That leaves only two obstacles standing between Chrysler and up to $6 billion in additional loans from the U.S. government: A partnership deal with Italy's Fiat Group SpA and an agreement to swap equity for debt with banks and hedge funds that hold $6.9 billion in secured Chrysler loans. Chrysler has four plants and thousands of employees in Ohio.
Details of the UAW deal weren't disclosed, but the union said it was crafted together with Chrysler, Fiat Group SpA and the U.S. government. That means the cost cuts have been blessed by the Treasury Department, which has been overseeing efforts to restructure Chrysler and its Detroit counterpart, General Motors Corp.
It also means Fiat was heavily involved in negotiations, a sign that the Italian automaker is serious about taking a 20 percent stake in Chrysler in exchange for providing the Auburn Hills, Mich., company with small-car technology.
Chrysler has been living on $4 billion in government loans and may get another $500 million to keep it alive through Thursday's deadline to restructure to the government's satisfaction. If it can't close the final deals, however, no more government money will be made available and the company almost certainly would be auctioned off in pieces under bankruptcy court supervision.
For weeks, it appeared Chrysler might not be able to meet a deadline many in the industry considered impossible. But White House economic adviser Larry Summers said Sunday the Obama administration is holding out hope that Chrysler can avoid bankruptcy court.
And two people briefed on negotiations with Fiat said the companies are close to signing a deal as long as debtholders agree to take equity in the company for a portion of the $6.9 billion they are owed. The people didn't want to be identified because talks have not been made public.
The UAW late Sunday called the concessions painful but said the deal takes advantage of the Obama administration giving Chrysler and its workers a second chance. The administration in February rejected Chrysler's original restructuring plan, saying the company could not stand on its own and had until April 30 to make further cuts and take on Fiat as a partner.
"The provisional agreement provides the framework needed to ensure manufacturing competitiveness and helps to meet the guidelines set forth by the U.S. Treasury Department," Chrysler Vice President of Labor Relations Al Iacobelli said in a statement. "As a result, Chrysler LLC can continue to pursue a partnership with Fiat SpA."
Separately, Canadian Auto Workers President Ken Lewenza said their deal makes labor costs competitive with non-unionized Toyota in Canada. It will save Chrysler about $240 million a year Canadian [[US$198 million) even though it doesn't cut base wages or pensions, amounting to the $19 Canadian [[US$15) an hour in savings the company was seeking. The agreement eliminates Christmas bonuses, semiprivate hospital room coverage, certain drug fees and a one-time vacation buyout of $3,500 Canadian [[US$2,885). It also reduces break times and vacation time.
Meanwhile, debtholders, the company and the Treasury Department remain far apart on terms to swap equity in the company for much of the debt. A counteroffer to the debtholders from the Treasury is expected as early as Monday.
UAW Vice President General Holliefield said in a statement that UAW members and retirees are being asked to make extraordinary sacrifices to help Chrysler become viable.
"In order for the company to have a sustainable future, all stakeholders will have to show the same willingness to contribute to the common good that has been demonstrated repeatedly by our membership," he said.
After rejecting the February plan, the government had said the UAW and Canadian Auto Workers unions must make further concessions, including the UAW taking equity in the company for at least half of a $10.6 billion payment into a union-run trust that will take over retiree health care costs starting next year.
The UAW says its deal "meets the requirements of U.S. Treasury Department loans to the company," and includes changes to the health care trust. Details will be presented to local union officials from across the country on Monday, with voting to wrap up by Wednesday.
"We recognize this has been a long ordeal for active and retired auto workers, and a time of great uncertainty," UAW President Ron Gettelfinger said in a statement. "The patience, resolve and determination of UAW members in these difficult times is extraordinary, and has made it possible for us to reach the agreement we will present to our membership."
Fiat CEO Sergio Marchionne was in the U.S. as talks continued for the automaker to take a 20 percent stake in Chrysler in exchange for its small-car technology. The government has said it would be willing to loan Chrysler up to another $6 billion if it is able to complete its restructuring and ink the deal with Fiat.
Fiat may build the small cars at Chrysler factories in the U.S., but they wouldn't arrive until late 2010 or early 2011, according to industry analysts.
"We're hopeful that the negotiations, which have been proceeding with great energy, are going to conclude successfully," Summers said in an appearance on "Fox News Sunday." "You never know -- with any negotiation -- until the very end. There are some issues that have been worked out. There are some issues that remain to be worked out, but it's in everybody's interest to see these negotiations succeed and we're hopeful that they will."
Also Sunday, General Motors Corp., which is living on $15.4 billion in government loans, said it will update its restructuring plan on Monday.
Two people briefed on the plan said GM will scrap its storied Pontiac brand and shutter more factories than the five it said in February it would close. The factories' locations won't be disclosed, said the people, who asked not to be identified because the plan has not been made public.
The plan will come as the company announces an offer to exchange up to $28 billion in GM bond debt for stock in the company.
GM faces a June 1 deadline to restructure or head into Chapter 11 bankruptcy protection.

[MoparDan]

Things definitely looking up!
http://www.allpar.com/news/index.php...eal-concluded/

Post: Chrysler creditor deal concluded

April 28th, 2009
by DaveAdmin
According to the Washington Post, Chrysler’s creditor group has reached an accord with the Treasury Department which will, coupled with this week’s union deals, prevent bankruptcy. A group of 45 financial firms have agreed to drop their debt demand from $6.9 to $2 billion and around 10% of the company’s equity, shared with the U.S. government. The UAW’s VEBA fund would take a 55% share, in exchange for handling retiree benefits [[replacing up to $10 billion in cash), and Fiat would gain 35% of Chrysler. Daimler’s 19.9% stake was given back yesterday; Daimler also agreed to pay $600 million to the pension plan over three years, and to forgive $1.5 billion in loans, presumably in exchange for Cerberus dropping a lawsuit charging Daimler with misleading the private equity firm.
The Post’s story has not been verified. [[Thanks, romedog.)

[Ltdave]

yeah we got our addendum to the 2007 national agreement today. we get to read it and digest it as best we can so we can vote from 6-10 am tomorrow [[day shift)...

if i said what was in it there would be people saying A) the UAW isnt giving up enough and B) that the company is trying to kill the working man so im going to keep my mouth shut i think...

[Retroit]

The correct answer is C) Neither the UAW nor the company should be blamed. This situation was brought on by factors beyond their control [[sub-prime mortgage meltdown, credit crisis, banks withholding bailout money, etc.) As much as this may hurt the union workers, they have the advantage in that, if and when the company does survive, they can use their leverage as supporters of the Obama administration to get back the concessions they are now taking. [[Let's hope.)

[MoparDan]

Eh, the latest for what it's worth.
http://www.allpar.com/news/

Chrysler to ally with Fiat, file bankruptcy

April 30th, 2009
by Bill Cawthon
The Wall Street Journal is reporting that Chrysler and Fiat will complete an alliance today that will include the Detroit automaker filing for Chapter 11 bankruptcy as part of the restructuring plan.
While key labor agreements were ratified and Chrysler’s four major creditors had agreed to a reduction in Chrysler’s debt, negotiations with Chrysler’s other creditors, including several hedge funds, broke down late Wednesday, making a bankruptcy filing all but inevitable. Treasury officials believe that the bankruptcy proceedings could be completed in a matter of weeks.

UAW ratifies new Chrysler contract

April 30th, 2009
by Bill Cawthon
By a wide margin, members of the United Auto Workers union approved the new contract with Chrysler Wednesday night. The union said 82 percent of production workers, 80 percent of skilled trades, 94 percent of the engineers and 90 percent of the clerical employees voted for the agreement.
The new agreement will give the UAW 55 percent ownership of Chrysler, though it will not give the union operating control of the company.
In a statement, union President Ron Gettelfinger said, “This has been a challenging time filled with anxiety and uncertainty for our membership. Our members have responded by accepting an agreement that is painful for our active and retired workers, but which helps preserve U.S. manufacturing jobs and gives Chrysler a chance to survive.�

[MoparDan]

It happened unfortunately!
Chrysler to File for Bankruptcy
http://www.washingtonpost.com/wp-dyn...043001639.html

[MoparDan]

More news released earlier on the AllPar site.

Chrysler will form new company with Fiat

April 30th, 2009
by Bill Cawthon
Chrysler will sell its principal assets to a new company under Section 363 of the Bankruptcy Code. The new company will be the result of the alliance with Fiat and will have the Chrysler, Dodge and Jeep brands, as well as most of Chrysler’s current employees and production facilities. Chrysler’s current employees will become employees of the new company.
Chrysler will pay $2 billion to its secured creditors for the assets.
Section 363 allows assets to be sold quickly, so the “new� Chrysler should spend only about 60 days under court supervision.
The remaining assets will go through a traditional Chapter 11 process where they will be sold or liquidated.

Freep: New Chrysler will not include 8 plants

April 30th, 2009
by DaveAdmin
The Detroit Free Press wrote that the new Chrysler will not include eight factories and machinery worth $2.3 billion to pay a portion of unsecured debt.
The name of the company to acquire Chrysler’s “good assets� was referred to as New CarCo Acquisition LLC [[�New Chrysler.�) This seems unlikely to be a permanent company.
Ron Kolka’s statement noted, “The major assets remaining would include eight [[8) manufacturing facilities, and related machinery and equipment, with a book value of $2.3 billion.�
While no details have been released, we believe this most likely includes the Conner Avenue plant, Viper and associated machinery, Newark [[DE) plant, the Plymouth Road facility, Twinsburg Stamping, foreign holdings, a variety of real estate which is unused or under-used, one of the two World Engine plants in Dundee, possibly engine plants that are to be shut down with the transition to the Pentastar V6, and possibly one of the “main� plants - Sterling Heights, one of the truck plants, Belvedere, etc. The former Outer Drive Stamping Plant [[Mt. Elliott Tool and Die) may also be included.


Chrysler bankruptcy judge appointed

April 30th, 2009
by DaveAdmin
According to Reuters, Arthur Gonzalez, one of the nation’s most experienced bankruptcy judges, will oversee the bankruptcy proceedings for Chrysler. He handled both Enron and WorldCom’s bankruptcies simultaneously; he has a favorable reputation and considerable experience in high-profile cases. The sale of key assets to the Treasury is expected to come very soon in the case, with other decisions possibly continuing for many months. The first hearing is due tomorrow morning.

[MoparDan]

From the Wall Street Journal.
http://online.wsj.com/article/BT-CO-...01-704043.html
Obama Takes Aim At Hedge Funds Amid Chrysler Bankruptcy

From the article:
A person at a hedge-fund firm that owns Chrysler loans, speaking anonymously, told Dow Jones Newswires that the difference between what loanholders would get in bankruptcy and out of bankruptcy wasn't that much, meaning the non-TARP lenders are making a political statement more than anything.
"Are they taking reputational risk for pennies?" asked the person. "Do the math on the recovery levels. It doesn't make sense for them to have held out for purely economic value."

And there you have it.