Fiat now set to sign Chrysler partnership deal

April 29, 2009

(ChattahBox) — Chrysler LLC, facing a government imposed deadline of Thursday, is expected to complete a merger deal with Fiat SpA by tomorrow that would be taken into bankruptcy court if necessary, according to numerous reports on Wednesday, which cited people familiar with the deal.

The partnership is the last piece of a huge restructuring plan which includes:

The United Auto Workers union which is voting today and expected to pass ratify cost-cutting contract terms that would also cut in half the remaining cash portion of Chrysler’s $10.6-billion obligation to a trust fund for retiree healthcare.

Under this plan, the United Auto Workers union’s retiree health plan would get a 55% stake in the company, Fiat 35%, the U.S. government 8% and the Canadian government 2%, according to the report.

According to a report in the Washington Post, Chrysler chief executive Bob Nardelli would be replaced by Fiat management as part of a bankruptcy plan.

It appears Chrysler will now avoid liquidation but bankruptcy court likely now hinges on whether a group of hedge funds that hold 30 percent of its debt agree to forgive most of what they’re owed.

Major banks that have lent Chrysler a total of $7 billion have already supposedly agreed to significantly reduce that debt.

Source: Detroit Free Press


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