In possibly the last move before a Fiat alliance, Chrysler has reportedly agreed to a deal with lenders to greatly reduce the company’s debt. A debt-for-equity swap was seen as the last major hurdle in the way of a Chrysler-Fiat strategic alliance, with the obstacle now cleared.
According to Reuters, Chrysler reached an agreement with lenders and the U.S. Treasury Department earlier on Tuesday. Although the exact details of the deal remain unknown, the agreement will reportedly see Chrysler’s debt reduced from $6.9 billion to just $2 billion, with an undisclosed amount of Chrysler shares going to lenders.
The news comes just days after Chrysler secured landmark deals with its unions in the United States and Canada. Under the terms of that agreement, the UAW’s retirement fund will own 55 percent of the ‘new’ Chrysler, according to Bloomberg. The retiree trust will also receive representation on Chrysler’s board of directors.
Chrysler, currently surviving off $4.5 billion in government loans, is in a race for its life to meet President Obama’s April 30 deadline for restructuring. If Chrysler fails to ink a deal with Fiat – which hinges on debt reduction and further union concessions – the Michigan automaker could be forced into bankruptcy.
04/28, 11:53 AM
posted by:
zfenderguy
They’re getting it done far better than I expected would ever happen. Talk about a company that has been to the brink and back time after time. It’d be miraculous if it all works out for Chrysler and they get past this. Then all they have to worry about is their inferior products and lack of proprietary alternative fuel technology (besides the sourced Dual Mode Hybrid), which will be sure to erode their market share even in good times. Go get ‘em Chrysler!
04/28, 11:57 AM
posted by:
jdasch1
Firther union concessions??? They will own 55 percent of this pile of sh$t company!! How can they refuse anything else thats asked of them? Bailout nation is alive and broke!
04/28, 12:01 PM
posted by:
JakeK66
I guess the American Motors Company name is coming back!!!!
Where’s George Romney to run this when you need him?
04/28, 12:14 PM
posted by:
johnnycanuck
Nice work. A new AMC might not be all that far fetched. There is a Hornet concept after all. Except wasn’t that supposed to be based on the Nissan Versa? Is it too early to have a drink?
04/28, 12:47 PM
posted by:
gta89mike
Where is Fiat with alternative fuel or green technology? I guess the hope would be that the alliance with Fiat will bring better technology and product quicker than if they were on their own.
04/28, 12:57 PM
posted by:
Payton Byrd
Chrysler is at the forefront of pure EV. I don’t know where you’re getting your news about Chrysler’s alternative fuel strategy, but it’s not by actually reading automotive news.
04/28, 1:16 PM
posted by:
LJ
I just hope that whatever small car(s) they decide to sell( Fiat/Chrysler)… if they sell a sedan version….that there will also be a hatchback version.
04/28, 2:09 PM
posted by:
NRG
Looks like the Challenger will survive. Great news. Have to root for the underdog.
04/28, 3:17 PM
posted by:
moparsalesman1
@ Payton
Thank you for pointing that out. I think picking on Chrysler is a lot like picking on the kid in grade school, just because everyone else was doing it. Instead of getting to know the person and making a decision for yourself. FTW!
04/28, 4:39 PM
posted by:
teahead
Great news!
Thank goodness Obama is our Prez. McCan’t/Palin-comparison would just let all US companies go belly up or offshore.
04/28, 11:02 PM
posted by:
Dangerous1
I agree. This is great news! Chrysler has come back from the brink again.
Now if Chrysler builds some well designed, well built cars that customers want they just may have a chance.