What debt holders want from Chrysler
TEXT OF STORY
Steve Chiotakis: Tick-tock goes the clock as Chrysler faces an end of the month government deadline to lock down its alliance with Fiat. Doing so means getting concessions from its union workers and from creditors. But this morning, we’re hearing the creditors aren’t much in the giving mood. Here’s Ashley Milne-Tyte.
Ashley Milne-Tyte. The creditors include some of the country’s biggest banks, like Citigroup and JP Morgan Chase. They hold $6.9 billion in Chrysler debt. But the government wants them to accept a repayment of around $1 billion.
This week, the banks said no. What the banks want is $4.5 billion and a stake in the new Chrysler.
John Wolconowicz of IHS Global Insight says the creditors and the government are engaged in a dance. But he says there’s a chance the government could step off the floor. He says the administration may consider Chrysler small enough to let it go.
John Wolconowicz: So if pushed into a game of chicken by the bond holders, the government may simply say, “OK, no dice, bankruptcy.” I don’t think that would happen with General Motors, and they may actually want to throw Chrysler into bankruptcy for political reasons.
He says if Chrysler went under, it would galvanize GM’s creditors and the unions to make the concessions needed to keep GM afloat.
I’m Ashley Milne-Tyte for Marketplace.
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