Tuesday, April 28, 2009

Great News For Chrysler : Chrysler lenders reportedly agree to loan terms, reaching agreement with UAW, and Daimler lets go of its 19.9% stake

So tomorrow is Chrysler's deadline to show a new viability plan to the Obama Auto Task Force Administration, to decide whether Chrysler would get the loans or not. Now, according to Bloomberg, they say that President Obama will announce tomorrow that Chrysler will be placed into Chapter 11 bankruptcy, but still partnership with Fiat. However, other news suggest that Chrysler is working-out the troubled situation, and that tomorrow Chrysler will get the loans.

To start with, according to a Reuters report, word is that Chrysler'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. Other reports suggest that the Chrysler-Fiat merger is recognized by the U.S Treasury Department to give out the loans needed. However, the news on that is settled tomorrow with Obama's announcement, hopefully!

Other news for Chrysler that come from Detroit News, that Chrysler has finally reached a deal with the United Auto Workers (UAW). It mainly states a $10.6 billion cut-off to the retiree health-care trust (VEBA). So with the CAW agreement, and now UAW agreement, Fiat's partnership with Chrysler is very, very close to complete.

Lastly, news from CNN Money, Daimler AG announced that it has reached an agreement with Chrysler to let go its remaining 19.9% stake in the company. Daimler sold an 80.1% stake in the U.S. automaker to private equity firm Cerberus Capital Management in 2007, ending a shaky decade-long relationship. Daimler will write off $700 million as a result of the deal.

So with Chrysler supported by its big lenders, and agreement with the workers, and fully 100% owned by Cerberus, the future seems bright. Now that all depends on tomorrow when Obama's Administration look into the viability plan, and decide.

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