Unions pave way for Chrysler survival deal
BY RON HAMMERTON | 27th Apr 2009
But Chrysler still has another tough nut to crack before Thursday: gaining another $US2.25 billion ($A3.15 billion) in debt concessions from lenders, led by some of American’s biggest banks.
According to Automotive News, the lenders have offered to write off almost half of the $US6.9 billion ($A9.76 billion) debt in return for a 40 per cent equity stake in Chrysler.
However, US treasury officials negotiating on behalf of Chrysler are asking for the debt to be cut to just $US1.5 billion in exchange for a five per cent stake in the company.
Chrysler has until Thursday to tie up the loose ends on the revised survival plan that must be acceptable to president Barack Obama’s automotive task force or it will not get further aid necessary for its survival. Without the cash, the car-maker will face almost certain liquidation.
The revamped deal with the United Auto Workers (UAW) has been approved by Fiat and the US government, but it still has to clear one more hurdle – a vote by rank and file members by Wednesday, which is thought to be a formality.
While no details have been released, the agreement is thought to revolve around further concessions by the union on Chrysler’s commitment to the worker’s pension fund.
In Canada, a deal has already been approved by Canadian Auto Workers (CAW) which agreed to give back some break time, a vehicle purchasing discount and tuition reimbursement, Automotive News reported.
The CAW said its members voted 87 per cent in favour of their new collective agreement with Chrysler, which has about 8000 unionised workers in Canada.
In Detroit, talks on the survival deal – described by UAW president Ron Gettelfinger as “an ordeal” – have been continuing at a hectic pace as the deadline looms.
Fiat Group CEO Sergio Marchionne flew to the US for last-minute negotiations on the Chrysler-Fiat partnership, just as Fiat announced a €411 million ($A759 million) first-quarter net loss – a massive reversal on last year’s €427 million profit.
Mr Marchionne stirred up a storm when he commented that Fiat would also have a “hard look” at Opel, which has been put up for sale with Vauxhall by owner GM.
Although he stopped short of saying Fiat would invest in Opel, Mr Marchionne’s comment was questioned by a top European Union official who suggested Fiat’s debt load might prevent it from taking on both Chrysler and Opel.
But Mr Marchionne returned fire, saying in a statement that he was “astounded by the tone and content” of EU industry commissioner Guenther Verheugen’s comments.
“I believed that his role in Brussels was clearly super partes, regardless of national origin,” Mr Marchionne said.
“This is second time in a matter of a few months that commissioner Verheugen has expressed views which have not been supportive of the auto industry, suggesting at some point that not all automotive houses in Europe will survive.
“These comments are not helpful to the ultimate goal of re-establishing a sound footing on which to build the future of this industry.
“As the commissioner in charge of enterprise and industry I would have expected him to engage in constructive dialogue with the European car-makers to resolve the issues which are negatively impacting industry today, rather than issuing death sentences for the industry or unilaterally selecting who will survive.” Fiat’s debt had risen to €6.6 billion at the end of March – up from €5.9 billion three months ago.
However, Mr Marchionne said Fiat had no intention of paying any cash for Chrysler or any other company.
Read more:
Chrysler changes tune on FiatStar turn as new pals hit speedbump
Chrysler, Fiat join forces