The US Treasury has reached an agreement in principle with Chrysler's first-lien lenders that may help the troubled automaker avoid bankruptcy, two people briefed on the discussions said yesterday.
The terms of the high-stakes debt restructuring deal were not immediately available, and representatives of Chrysler, the lenders and the Treasury could not be immediately reached for comment.
Chrysler's lenders, owed $6.9 billion (Dh25.3bn) in secured loans, have agreed to write down the debt to $2bn, the Washington Post reported. The news comes as Chrysler races to meet a deadline of April 30 to complete an alliance with Italy's Fiat and follows an announcement by Chrysler that it has also reached an agreement with the United Auto Workers leaders to modify the union's labour contract and to reduce the amount that the company owes a retiree health fund.
The negotiations between Chrysler's lenders and the UAW had played out in parallel because creditors were wary of the risk that the Obama administration's autos task force would try to force a settlement that favoured the union.
The committee of Chrysler's lenders including JPMorgan Chase, Goldman Sachs Group, Morgan Stanley and Citigroup last week proposed taking $3.75bn in debt and a 40 per cent equity stake in a restructured company. That was above an offer of $1.5bon in debt and a five per cent equity stake from Treasury Department officials.
US officials had been expected to make a new offer on Monday to the lenders' group representing about 45 institutions.
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