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Chrysler/Fiat deal looke to be done:

Highlights of Chrysler's bankruptcy, Fiat deal


April 30, 2009 - 6:09 pm ET

WASHINGTON (Reuters) --The Obama administration summarized its plan for Chrysler's Chapter 11 bankruptcy and Chrysler's alliance with Fiat S.p.A. as follows:

Bankruptcy

ÔÇóChrysler will use Section 363 of the federal bankruptcy code to "clear away the remaining impediments" to its restructuring.

ÔÇó"New Chrysler" will buy all assets of "old Chrysler" out of a Chapter 11 bankruptcy case in exchange for a $2 billion payment to secured lenders.

ÔÇó"New Chrysler" will create an independent trust to provide health care for Chrysler retirees, funded by a note of $4.6 billion payable over 13 years with a 9 percent rate of interest. It will receive 55 percent of equity of the reorganized Chrysler and will have the right to choose one director.

ÔÇóU.S. Treasury gets 8 percent of equity in new Chrysler and right to choose four company directors.

ÔÇó Governments of Canada and Ontario will together get 2 percent of equity in new Chrysler.

ÔÇóThe U.S. government will stand behind Chrysler's efforts to use our bankruptcy code to clear away remaining obligations.

Chrysler-Fiat deal

ÔÇó The alliance creates 6th largest global automaker.

ÔÇóFiat brings "billions of dollars" in technology to help Chrysler build more fuel-efficient cars in U.S. factories.

ÔÇó Fiat has right to choose three Chrysler directors. It can earn up to 15 percent in additional equity in three tranches of 5 percent for meeting targets such as producing a vehicle that performs at 40 mpg from a U.S. factory.

U.S. government

ÔÇóThe U.S. Treasury will lend up to $6 billion to the Chrysler-Fiat alliance through its restructuring period.

ÔÇóThe government is prepared to provide $3.3 billion debtor-in-possession financing through Chapter 11 proceeding.

ÔÇóThe government is prepared to lend $4.7 billion to the new Chrysler in the form of a term loan with $2.1 billion due in 30 months. Half of the balance will be due on the 7th anniversary, and the remainder will be due on the 8th anniversary of the loan. There is an additional note of $288 million, which is the government's fee for making the loans.

Dealers, customers

ÔÇóGMAC will provide dealer and customer financing, and continue to do so after Chrysler emerges from bankruptcy. The U.S. government will provide capitalization that GMAC requires to support the Chrysler business.

ÔÇóChrysler will honor consumer warranties. The U.S. Treasury is making $280 million available as a backstop on the orderly payment of warranties for cars sold during the restructuring period.

Creditors

ÔÇó Chrysler's largest secured creditors agreed to exchange their portion of $6.9 billion debt for a pro-rata share of $2 billion in cash.

ÔÇóThe UAW made concessions on wages, benefits and retiree healthcare that will help save jobs and make Chrysler more competitive.

ÔÇóDaimler, a minority shareholder in Chrysler, will waive its share of Chrysler's $2 billion of second-lien debt, give up its 19 percent equity interest, and pay $600 million to Chrysler's pension funds.

ÔÇóCerberus will waive its share of Chrysler's $2 billion of second-lien debt and forfeit its entire equity stake in Chrysler.