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By Mike Caggeso
Chrysler LLC has asked court approval for a May 22 exit from bankruptcy, outlining Fiat SpA's (OTC ADR: FIATY) plan to scoop Chrysler assets and urging that a quick bankruptcy is vital to keep suppliers, dealers and consumers' trust in the brand.
According to its filing in New York bankruptcy court, Chrysler seeks approval of a plan where creditor objections must be submitted by May 11, competing bids must be submitted by May 15, and a May 21 hearing to rubber stamp the winning bid, Bloomberg reported.
"Key suppliers and dealers simply cannot survive a prolonged period of uncertainty," Chrysler said in its motion seeking approval of the sale process. "Consumers will look elsewhere for vehicles if delays persist."
Chrysler entered Chapter 11 bankruptcy protection last Thursday and listed assets of $39.3 billion and liabilities of $55.2 billion.
Chrysler will receive $10.5 billion in U.S. and Canadian government financing – $8.08 billion from the U.S. government and $2.42 billion from Canada and Ontario. The U.S. government will receive an 8% stake in the company, and Canada and Ontario will jointly receive a 2% stake.
Fiat has a 20% stake in Chrysler, and it could increase it to 35% if Chrysler meets a set of milestones.
The leading bid for Chrysler's assets is an unnamed entity owned by Fiat, the U.S. Treasury, the Canadian government and an employee association.
If other potential buyers are out there, they've remained silent on topping the leading $2 billion bid.
"No potential buyers have expressed an interest in acquiring Chrysler as a going-concern as an alternative to the proposed transaction with Fiat," Greenhill Managing Director Bradley Robins said in an affidavit filed with the court in support of the sale, Bloomberg reported. "Chrysler has insufficient funds to continue operating and no other providers of financing."
However, opposition to the deal comes from within Chrysler. A group that calls itself Chrysler's non-TARP lenders, is also contesting the $4.5 billion in addition TARP money the car company will receive to help reorganize under bankruptcy, Bloomberg reported.
Fiat Plans to Buy GM Assets
If Fiat has its way, Chrysler isn't the only American carmaker it wants a piece of.
Less than a week after landing a partnership deal with Chrysler, Fiat Chief Executive Sergio Marchionne has sought approval from Germany's government support to buy Opel, the core brand of General Motors Corp.'s (NYSE: GM) European operations.
Fiat said such a merger would create a automotive group that rakes in about 80 billion euros ($107 billion) in revenue.
The board-approved initiative would evaluate several operational options – including the potential of spinning off the new auto company with its own listing, the company said.
GM hasn't commented on Fiat's plan, but it did release a statement saying it is actively trying to offload its Saturn brand and retail network to a number of potential buyers.
GM said it is hoping to secure a deal with a buyer "later this year."
News and Related Story Links:
- Money Morning:
U.S. Auto Industry Spins Out of Control, as Chrysler Goes Bankrupt and GM Struggles to Reverse Course
Fiat Board of Directors
- General Motors:
GM to proceed with efforts to sell Saturn