Following a rejection earlier this month, Chrysler ’s lenders have entered a counter offer for a debt for equity swap. Chrysler must successfully complete a debt for equity swap by April 30 – per President Obama’s deadline – or face possible bankruptcy.
The original debt for equity draft – penned by the government’s auto task force and Chrysler – offered Chrysler’s lenders approximately 15 cents on the dollar, leaving about 45 firms to fight over $1 billion in Chrysler debt. The counter offer erases $2.5 billion of Chrysler’s $6.9 billion debt but asks for an equity stake in the new automaker, according to Automotive News. However, it remains unclear just how big a stake lenders are seeking.
The counter offer seems extremely beneficial for Chrysler and could prove to be lucrative to lenders, so long as the proposed Chrysler-Fiat alliance bears fruit. With just nine days until the April 30th deadline, we suspect Chrysler will be signing the dotted line the counter offer.
