BREAKING: Chrysler lenders, U.S. Treasury reportedly agree to terms [*UPDATED]
by Chris Paukert on Apr 28th 2009 at 10:56AM 
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]
_opt_thumbnail.jpg)
Reader Comments (Page 1 of 3)
Steve Lopez 11:03AM (4/28/2009)
No more government intervention. Once the loans are approved and signed off on, let Chrysler and Fiat work out the rest.
Let the car makers start getting reorganized again and do their job.
Reply
BoxerFanatic 1:59PM (4/28/2009)
My thoughts as well, except, they should never have made government loans.
Government is not a bank. It is a tax collector. It doesn't survive on competition and voluntary savings and interest revenue. Government exists on seizing the results of people's efforts.
Since when has the US Treasury department become a corporate negotiation entity? Where does the Constitution say that is a function of the executive branch, or the purview of the legislative branch's capability of approving agencies, and funding?
hypermiler 11:04AM (4/28/2009)
Here comes UAW Motors from the ashes of Chrysler.
Reply
skicat 11:51AM (4/28/2009)
Worker run companies? Decent middle-class wages for mind-numbing work most posters (or is it poseurs?) on AB wouldn't touch with a 10-ft. pole? Home ownership? College for the kids? Frikin' commies! Nuke 'em all!
jbuers 1:05PM (4/28/2009)
The workers don't own a thing, the UNION does. There is a difference.
This is the same union that, not too many years ago, went on strike because they weren't being compensated well enough. I'm not blaming the UAW for the downfall of the American Auto Industry, but they surely weren't helping. If you can't survive on $30 an hour working 40+ hours a week (in Detroit no less!), you've got some serious problems with money management. That ain't your employers fault.
Before you vote my post down, I'm not just spewing unsubstantiated opinion. (opinion, yes, but I have a little understanding of the situation) Half of my family lives in the Detroit area, with the majority of my uncles working for GM and Chrysler. The UAW has evolved into some sort of pseudo mob. If you want to get ahead in the company, you have to be union. It's not that the company requires it, but the people in the position to either help you or hurt you are union.
I hope it works out for Chrysler, but this is unsettling news.
Big Rocket 10:29PM (4/28/2009)
@skicat: I don't see anything decent about union labor costs that were, and still continue to be, substantially higher than their non-union American counterparts, which only served to put the Big 3 at a huge disadvantage for years, if not decades. Just last year, the UAW president Ron Gettelfinger himself admitted union labor costs drove prices up for consumers, an average of about $1,000 per vehicle -- and that's just going from expensive union labor costs, to slightly less expensive union labor costs. It would be a lot more than $1K per vehicle if the Big 3 went from completely union to completely non-union. That's not decent, that's downright obscene when 2 of the Big 3 are now forced to beg the government for bailout money.
Bloomberg, 2008: "Ford's... $60 expense for a current UAW member's wages and benefits... UAW President Ron Gettelfinger last month estimated that new contracts at Ford, General Motors Corp. and Chrysler LLC will save the automakers 'somewhere in the neighborhood' of $1,000 per vehicle. Buyouts of higher paid workers will help Ford increase the number of new hires at lower wage levels."
http://www.bloomberg.com/apps/news?pid=20601209&sid=aRxTHKjUeS7w&refer=transportation
Zapp 4:46PM (5/01/2009)
If only they had the gall to actually put their name on the product. Then the American public might finally make the association of quality and value with the real manufacturers.
nadnarb 12:53PM (4/28/2009)
Does anyone else look at the word Billion and not even think it's much money anymore? I'm now at the point where Trillion is the word to get my attention.
Reply
Sean 11:11AM (4/28/2009)
Well, however it goes, it's certainly going to be interesting.
Reply
MemphisNET 11:19AM (4/28/2009)
Chrysler could be 100% owned by ''itself'' and the experts of the Autoblog community still wouldn't be satisfied.
I personally am happy that Chrysler has pulled its feet out of the fire -- the new interiors, concepts like the 200C and the new RAM, Challenger and Grand Cherokee prove we're at the beginning of the new lean Chrysler.
Now give me a Bravo-based Caliber/Neon!
Reply
ronEbear 11:26AM (4/28/2009)
Or a Hornet based on a 500.
Mazda FTW! 11:27AM (4/28/2009)
Pretty much. Theres some sort of sick fascination some posters here get from domestic companies failing and people loosing jobs.
The concept of Free Trade and Fair Markets sound noble. Until the day your job gets cut/out-sourced.
Aprime 11:30AM (4/28/2009)
Blah blah blah fanboy love.
n8new 11:54AM (4/28/2009)
I'm with you MembhisNET. There is NOTHING one can do to satisfy those who enjoy wallowing in negativity.
I'm glad to hear the "good" news. (Whatever "good" means in relation to this current situation and economy.) I'm currently not in the market for a new vehicle and don't hope to be for several years. But I'm glad that the possibility still exists that, when I am, Chrysler and, more particularly Jeep, can still be at the top of my list.
I've had wonderful service from your vehicles, and I've been rooting for you all the long, Chrysler. Continue to work it out!
paul34 12:01PM (4/28/2009)
Their interiors are improved, to be sure, but still aren't quite "there." It's still just a variation of the same old, same old. Decent overall design, but poor execution, especially in the materials selection and finishing. Also, the smell is still terrible.
1337 12:49PM (4/28/2009)
Either sell me a Fiat 500 or stop wasting my tax money on your bailout.
Aprime 12:50PM (4/28/2009)
Oh come on, everyone knows Memphis is an overenthusiastic Chrysler fan.
MemphisNET 1:12PM (4/28/2009)
@Aprime
What do you drive? Do you like it? Would you buy again? Why shouldn't I be happy that a manufacturer I like is still around building the vehicles I prefer?
@1337
1) Cool name
...
2) Loan. If ''your'' tax dollars weren't spent on this, they'd be spent on something else you don't like anyway. Is spending this money on keeping people working really that bad? Chrysler paid back their late 70's/early 80's loans ahead of schedule, and even though it is a bit sad they're needing the help again, the problem isn't isolated to Chrysler or the domestic manufacturers, it's a good percentage of the industry!
MemphisNET 1:27PM (4/28/2009)
And not that I have to qualify myself to some faceless internet poster, but I like ALL cars -- everything has it's place. I have ZERO interest in a Corolla, but I understand why people like it. I'm not a truck guy, but a totally appreciate why someone would want a Suburban/Yukon. I would never enjoy an S2000 the way some would because I love deep-down torque, not power in the upper band.
And Civic's? They're like an a$$hole. Everyone's got one.
whofan 11:34AM (4/28/2009)
Its very good news for those of us who love cars and the American standard of living.
God bless these American companys who were instrumental in giving us the tools to win the second world war and prosperity to follow.
I appreciate the big 3 warts and all.
If Japan can have 7 auto manufactures the US should be able to have 3.
Love the New Dodge Ram, Nice truck!
Reply