just-auto.com

US: Government OKs $5.5bn for GM and Chrysler restructure

By just-auto.com editorial team | 21 April 2009

The US government will make about US$500m available to Chrysler to get it through to the end of this month, and tries to agree an alliance with Fiat, and up to US$5b to the end of May to help General Motors restructure outside of bankruptcy, a media report said on Tuesday.

The administration last month allocated up to $500m to help Chrysler get through April, according to a report on oversight of corporate bailout funds prepared by the Treasury Department inspector general cited by Reuters. GM was to get $5bn to help it operate until the end of May.

Meanwhile, according to the news agency, the United Auto Workers (UAW) union has urged its members to lobby the White House by phone or email to ensure workers and retirees are treated fairly in negotiations at both companies on new concessions, which are considered vital for the automakers' to survive.

"We need President Obama and his auto task force to stand up for the interests of workers and retirees in these restructuring negotiations," the union said in an website appeal to members.

Along with GM and Chrysler bondholders, the UAW is under pressure from the treasury's autos taskforce to help reduce debt at the two automakers. Bondholders are being asked to accept equity in exchange for debt while the UAW is negotiating over restructuring the finances of a multi billion dollar retiree health care trust.

The administration's task force does not believe Chrysler can stand alone and is brokering meetings this week in Washington and Detroit to see if a deal with Fiat is possible, Reuters noted.

Obama's chief spokesman, Robert Gibbs, on Monday would not forecast where the talks were headed but said the administration was working "with all of the stakeholders involved" and was hopeful a solution would be found to "continue the Chrysler brand" and strengthen the industry overall, Reuters said.

"The president continues to be involved in this issue and understanding the tremendous economic importance both for the overall industry and for the dozens of communities throughout the country that are dependent upon Chrysler and auto parts suppliers that supply Chrysler for good paying jobs," Gibbs said.