Detroit — Italian automaker Fiat Group SpA is expected to sign a partnership agreement with Chrysler LLC by today as negotiations continue to keep the struggling automaker alive without filing for bankruptcy protection, according to three people briefed on the deal.
The Fiat partnership is the last piece of a huge restructuring plan needed for Chrysler to continue operations as it approaches today’s government deadline to cut labor costs, slash debt and take on a partner.
But it was unclear Wednesday whether the struggling Auburn Hills-based automaker will be able to stay out of bankruptcy court.
MSU professor of labor and industrial relations John Revitte said he’s optimistic of the company’s outlook after the series of moves Chrysler made this week.
“I still think they can pull it off without bankruptcy,” he said. “Chrysler’s history is a bit like a roller-coaster, and they’ve always managed to right themselves.”
Late Wednesday, the government added $250 million to its offer that would give Chrysler’s lenders $2 billion to erase $6.9 billion in secured debt, one of the people said.
Four large banks that control 70 percent of the debt already agreed to the deal, but at least some of 46 hedge funds were holding out. The creditors were to vote on the offer by 6 p.m. Wednesday, but results were unknown.
If they don’t agree, Chrysler would file for Chapter 11 bankruptcy and enter a short period of restructuring. If they do agree, the company would be able to restructure out of court.
Chrysler has borrowed $4 billion from the government since the beginning of the year and could soon be in danger of running out of cash.
On Sunday, the Canadian Auto Workers ratified concessions to the automaker, and the United Auto Workers in the U.S. reached a tentative cost-cutting deal that members were to have finished voting on by Wednesday night.
Chrysler Chairman Robert Nardelli said Wednesday in an e-mail to employees that the automaker was making progress.
“I’m encouraged by this progress and I want you to know I deeply appreciate the sacrifices made by so many constituents to help us reach the restructuring targets,” Nardelli wrote.
UAW members are expected to approve the contract concessions, which include taking a 55 percent stake in Chrysler in exchange for about $6 billion of the $10.6 billion Chrysler must pay into a union-run trust.
Revitte said he is surprised at the government’s involvement.
“I’ve never seen something like this. I’d be surprised if they ever get this involved again,” he said.
Governor Jennifer Granholm, speaking in Lansing, urged creditors to consider Chrysler’s 54,000 employees.
“On behalf of Michigan, on behalf of the thousands of people who will be affected if this company is forced into bankruptcy, I am publicly asking these hedge funds to not be greedy but to do what the banks have done and what everyone else around the table has done — take the concessions,” she said.
Staff writer Pat Evans and The Associated Press contributed to this report.
Support student media! Please consider donating to The State News and help fund the future of journalism.
