Tuesday, April 28, 2009

Chrysler Creditors Agree to Deal

Oh thank God. Hat tip to Graham and the breaking news tweet - the WaPo is reporting that Chrysler's creditors have seen the writing on the wall and came to the conclusion that something is better than nothing. Not out of the woods yet, but it's looking better...

The Treasury Department reached an agreement with Chrysler's creditors late last night that may prevent the troubled automaker from going into bankruptcy, a source familiar with the matter said today.

The carmaker had owed a fractious group of 45 banks, hedge funds and other firms about $6.9 billion. These creditors have agreed to write down the debt to $2 billion.

The two sides had been far apart in the negotiations, leaving Treasury officials little choice but to prepare a bankruptcy filing. Indeed, one government official said last week that it would take a "miracle" for a deal to be worked out. But the lenders realized that they would have received far less in a bankruptcy and ceded to government demands.

The UAW ends up holding the majority stake.

A source familiar with the matter said if the restructuring of the storied American automaker is completed according to the tentative deal, the union would have a 55 percent stake in the company, the Italian automaker Fiat would eventually hold a 35 percent stake, and the government and Chrysler's lenders would share a 10 percent stake in the company. The source spoke on condition of anonymity because he was not authorized to comment publicly on the talks.

The UAW needs to ratify the deal made over the weekend, that vote is expected tomorrow. Go read the story for the complete breakdown on the details.

I'm thinking I need a Zeo. Do they come in any other color besides orange?