Treasury officials held last-minute negotiations Wednesday with several hedge funds and other major Chrysler lenders hoping to strike a deal to reduce the automaker’s debt, the WSJ reported.
From WSJ: [I]n a last-ditch effort to avoid a Chrysler bankruptcy Wednesday afternoon, [the Treasury Dept.] boosted most recent offer to lenders by $250 million…Lenders were offered $2.25 billion in cash for their $6.9 billion in Chrysler debt.
At a town hall meeting Wednesday in Missouri, Mr. Obama said he didn’t know “whether the deal is going to get done” to restructure Chrysler outside of bankruptcy.
The president told the audience that Chrysler’s unionized workers “have made enormous sacrifices,” but a key question now was “are the bondholders — the lenders, the money people — are they willing to make sacrifices as well? We don’t know yet.”
Most of Chrysler’s biggest lenders, including J.P. Morgan Chase & Co. and Citigroup Inc., have agreed to a debt-reduction deal, but the agreement can’t go forward unless all 46 of the lenders are on board.
The debt agreement would clear a major hurdle that is keeping Chrysler from restructuring outside of bankruptcy.
It’s a bit unclear at this point why Chrysler’s biggest bondholders (JPM, Citi) would agree to such a low amount : 29 cents on the dollar. ?!