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Chrysler tries to prepare for Fiat deal

Jeremy Hobson Apr 15, 2009
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Chrysler tries to prepare for Fiat deal

Jeremy Hobson Apr 15, 2009
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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.

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