Written by admin on June 2nd, 2009
Michigan Representative Wants Banks to Reorganize Chrysler Debt
In an aggressive move, Rep. Gary Peters, a member of the House Financial Services Committee, urged a number of Chrysler Motor’s highest profile debt-holders to aid in the renegotiation of the automaker’s balance sheet, with the goal of reducing debt. Peters sent letters to the CEOs of JPMorgan and Chase, Citigroup, Morgan Stanley, and Goldman Sachs, asking for their participation.
Peters wrote the following to Jamie Diamond, the chairman and CEO of JPMorgan and Chase: “As one of the principal holders of Chrysler’s outstanding secured debt, I am writing to encourage you to participate fully in the process of negotiating with Chrysler to extinguish the vast majority of that debt.”
Similar messages striking the same chords of cooperation where sent out to the other big banks.
Rep. Peters had noted that JPMorgan was one of many companies that received government funds as part of TARP. (The company received $25 billion. Other players like Citigroup have received a similar amount while Morgan Stanley and Goldman Sachs received $10 billion.)
He observed, “Any additional money you receive from Chrysler will also be taxpayer dollars, provided to Chrysler as part of the president’s auto industry restructuring plan.”
According to the latest numbers, Chrysler has $6.8 billion in first-lien secured debt. As things stand, the banks holding Chrysler’s debt have not been willing to restructure the automaker’s outstanding debts.
As part a proposed $4 billion that Chrysler would have with the Treasury Department, the renegotiated terms would have allowed the company to eliminate about two-thirds of its total debt.
Peters is determined to overcome the banks’ reticence to approach the negotiation table. His primary concern is to reinvigorate the financial sector while saving the auto manufacturing industry as well. His appeal to JP Morgan and the others was for vigorous cooperation.
More recent news from the Obama Administration ties new plans to aid the carmaker with its proposed agreement to collaborate with the Italian carmaker Fiat SpA. As it stands, the short-term aid would be replaced with a loan for $6 billion, provided the partnership stays intact.
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