Details are scarce at the moment, but word is emerging that Chrysler's lenders have reached a deal with the U.S. Treasury Department that could help stave off bankruptcy.
According to a Reuters report, word is that the Pentastar's first-lien lenders have agreed to write down the $6.9 billion in secured loans they are owed to just $2.0 billion, although there are no details as to whether lenders will receive an equity stake in exchange. That news comes on the heels of Chrysler's announcement that they have already agreed to new terms with the United Auto Workers and that Daimler has agreed to give up its remaining share in the company.
While a deal between Chrysler lenders and the Treasury is key step in the company's reorganization efforts, the planned merger with Fiat will still need to be firmed up by the Obama Administration's April 30 deadline if additional federal funds are to be made available.
*UPDATE: Bloomberg is reporting that the UAW's retiree health care fund has agreed to halve Chrysler's $10.6B debt to the trust in exchange for 55% of the automaker. As part of that deal, the trust will reportedly gain representation on Chrysler's board of directors – effectively meaning that the UAW will likely have at least one seat at the table.
[Sources: Reuters; Bloomberg | Image: Bill Pugliano/Getty]