Chrysler Group has agreed a deal with the shell company holding its old assets to acquire a Sterling Heights, Michigan, assembly plant for US$20m, US Bankruptcy Court documents showed.
The purchase would keep the plant in the Chrysler fold, reversing a controversial decision fought by the automaker’s major union that at one time would have closed the plant as soon as the end of this year, Reuters reported.
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The move would save about 1,200 jobs at the plant, which builds the Chrysler Sebring and Dodge Avenger midsize sedans, and is a major victory for the United Auto Workers union, which owns 55% of Chrysler, the report noted.
Chrysler, which emerged from bankruptcy in June 2009 under the management control of Fiat, had already decided to produce upgraded versions of the Sebring and Avenger at the plant to the end of 2012.
Chrysler CEO Sergio Marchionne last week said reviving the automaker’s midsize sedans was a key part of its planned turnaround.
Last month he predicted Chrysler would book an operating profit this year if it sold 1.65m vehicles.
As part of Chrysler’s bankruptcy restructuring last year, the plant was placed with Old Carco LLC, the shell company that represents the assets of Chrysler that remain in bankruptcy and were not bought by Fiat.
In its filing with the US Bankruptcy Court for the Southern District of New York, Old Carco said it started negotiating with Chrysler over the plant shortly after the automaker unveiled its five-year business plan in November.
Old Carco received no other written offers and, in court documents supporting the sale plan, said estimates of potential gross proceeds had ranged from $8.5m to $21m, Reuters said.
Chrysler’s five-year plan, unveiled by Marchionne, calls for an all-new mid-size sedan for Chrysler based on Fiat platforms in 2013. The Sebring and Avenger are expected to stay on sale at least until then.
The Dodge line is also in for an extensive revamp, according to plans Chrysler announced in November.
The Sterling Heights City Council approved tax incentives in January to support Chrysler’s retention of the plant, Reuters reported.
The sale requires court approval and Old Car Co has asked for a hearing on 11 March 11 to approve the deal.
