Chrysler tries to prepare for Fiat deal

Jeremy Hobson Apr 15, 2009
HTML EMBED:
COPY

Chrysler tries to prepare for Fiat deal

Jeremy Hobson Apr 15, 2009
HTML EMBED:
COPY

TEXT OF STORY

Bill Radke: Sixteen days and counting. That’s how long Chrysler has to make a deal with Italy’s Fiat. Otherwise no more government money and it’s off to bankruptcy court. As Marketplace’s Jeremy Hobson tells us, Chrysler has a lot of negotiating to do.


Jeremy Hobson: Fiat won’t partner with Chrysler unless Chrysler gets $6 billion from Washington, and that money won’t come unless Chrysler gets concessions from its creditors and its workers first.

At the top of the list is about $7 billion owed to banks and hedge funds. Chrysler wants them to forgive more than 80 percent of that debt.

Erich Merkle: Is it possible? Yes I think it is. Chrysler certainly believes that it is.

That’s auto industry analyst Erich Merkle. The problem is those creditors think they could get a better deal in bankruptcy court. Merkle says that option could be disastrous.

Merkle: They could in some way be similar to like the Lehman Brothers of the financial industry. Because right now the supply base is in such a tenuous state.

Merkle says if bankruptcy becomes liquidation, suppliers that make even a tiny part for Chrysler cars could shut down. That, he says, could ripple far beyond the auto industry.

I’m Jeremy Hobson for Marketplace.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.