At eight minutes past noon today the President of the United States strode into the Grand Foyer of the White House to speak on the Chrysler restructuring.
It may as well have been the OK Corral by the time the President got done shooting down the outlaws that were holding up the restructuring of the wounded, but still breathing Chrysler Corporation.
He began simply enough by saying that his team would continue working with General Motors as its May 30 deadline approached, but quickly moved to the show down at hand.
“And today, after consulting with my Auto Task Force, I can report that the necessary steps have been taken to give one of America’s most storied automakers, Chrysler, a new lease on life,” he said.
“This is a company that has a particular claim on our American identity… Chrysler has not only been an icon of America’s auto industry and a source of pride for generations of American workers; it’s been responsible for helping build our middle class, giving countless Americans the chance to provide for their families, sending their kids to college, saving for a secure retirement. It’s what hundreds of thousands of autoworkers and suppliers and dealers and their families rely on to pay their bills in communities across our industrial Midwest and across our country.”
“After consulting with my Auto Task Force, industry experts, and financial advisers, I decided to give Chrysler and Fiat 30 days to reach an agreement. And the standard I set was high — I challenged them to design a plan that would protect American jobs, American taxpayers, and the future of a great American car company. But over the past month, seemingly insurmountable obstacles have been overcome, and Chrysler’s most important stakeholders — from the United Auto Workers to Chrysler’s largest lenders, from its own — from its former owners to its suppliers — have agreed to make major sacrifices.
“So, today, I am pleased to announce that Chrysler and Fiat have formed a partnership that has a strong chance of success. It’s a partnership that will save more than 30,000 jobs at Chrysler, and tens of thousands of jobs at suppliers, dealers and other businesses that rely on this company.
“Now, this partnership was only possible because of unprecedented sacrifices on the part of Chrysler’s stakeholders, who are willing to give something up so that this company — and all of the men and women whose livelihoods depend on it — might see a better day. Chrysler’s management, and in particular, its CEO, Robert Nardelli, have played a positive and constructive role throughout this process. The United Auto Workers, who had already made painful concessions, agreed to further cuts in wages and benefits; cuts that will help Chrysler survive, making it possible for so many workers to keep their jobs and about 170,000 retirees and their families to keep their health care.
“Several major financial institutions, led by J.P. Morgan, agreed to reduce their debt to less than one-third of its face value to help free Chrysler from its crushing obligations. The German automaker, Daimler, agreed to give up its stake in Chrysler and contribute to the company’s pension plan, further easing Chrysler’s financial burden. And countless Americans across our country will be making major sacrifices, as well, as a result of plans to consolidate dealers, brands, and product lines,” the President said.
Then the guns started blazing and the last obstacles to a Chrysler restructuring were blown away:
“While many stakeholders made sacrifices and worked constructively, I have to tell you some did not. In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting. I don’t stand with them. I stand with Chrysler’s employees and their families and communities. I stand with Chrysler’s management, its dealers, and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars. I don’t stand with those who held out when everybody else is making sacrifices. And that’s why I’m supporting Chrysler’s plans to use our bankruptcy laws to clear away its remaining obligations so the company can get back on its feet and onto a path of success,” the President said.
As he was speaking Chrysler was filling for bankruptcy in a New York Federal Court. Chrysler’s largest secured creditors have agreed to exchange their portion of the Company’s $6.9 billion secured claim for their pro-rata share of $2 billion in cash at closing. The Bankruptcy Court process will be used to confirm this treatment on those lenders, who had just been shot by the president, who failed to accept the offer that was accepted by a majority of the lenders.
As to they implications of this shoot out on recalcitrant GM bondholders, well, I’ll bet the President has already reloaded.
Tags: JP Morgan, President Obama, auto task force, chrysler and fiat, hedge funds and speculators, investment firms and hedge funds, ken zino, l chrysler restructuring, president shoots to kill, robert nardelli, thedetroitbureau.com, unjustified taxpayer-funded bailout