Treasury Dept. Secures Chrysler Tentative Deal

The Treasury Dept. has worked out a tentative agreement with Chrysler’s largest secured creditors that, if approved, may help the automaker avert bankruptcy, The NYT reported on Tuesday.

From The NYT: Chrysler has about $6.9 billion in secured debt owned by big banks like Citigroup and JPMorgan… and a group of hedge funds. Under the proposal, all of the debt would be canceled in exchange for $2 billion in cash..

The proposal is now being reviewed.. [by Chrysler’s biggest secured creditors, which hold about 70% of the co,’s secured debt]…If a deal is reached, it would amount to creditors being paid about 28 cents on the dollar for their outstanding debt. That is a premium to where the debt is currently trading in the market, but much less than the 60 cents on the dollar that creditors originally said they wanted…

The two sides had been far apart in negotiations ahead of a Thursday deadline, but they have significantly narrowed the gap in recent days.

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