Chrysler creditors are planning a counter offer to the US treasury this week, in which they might ask for equity in a firm combining Chrysler with potential partner Fiat in exchange for concessions, the Wall Street Journal (WSJ) reported, citing “people familiar with the matter”.
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Sources had earlier told Reuters the lenders of the $7bn, including JPMorgan Chase & Co, Citigroup, Goldman Sachs and Morgan Stanley, were talking with the government about reducing Chrysler’s debt by swapping some of it for equity, new debt or a lesser amount in cash.
Rival General Motors has been talking with bondholders over converting around $28bn of the automaker’s debt into GM equity, according to recent media reports.
The government had suggested a reduction of as much as $6bn in Chrysler’s debt, a separate source close to the talks told Reuters on 3 April.
The WSJ on Monday (13 April) said Chrysler lenders had received 20 to 30 pages of data and financial models from the treasury last Sunday. The documents reportedly showed government assumptions on Chrysler’s cost structure, its internal operating results, information on new union contracts and details on Fiat’s contributions to a joint company.
Various Chrysler and back officials were unavailable to comment to Reuters.
The WSJ added that the lenders’ steering committee, previously controlled largely by the big banks, was expanded at the weekend to include three other debt holders – Oppenheimer & Co, distressed investor Stairway Capital Management and investment bank Perella Weinberg Partners – all of which hold chunks of Chrysler bank debt.
The WSJ added that the decision to expand the committee’s ranks was made late last Friday after several of the non bank creditors had taken steps to set up an alternative creditors committee.
