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Posts Tagged ‘chrysler bondholders’

Chrysler Can’t Sell Viper and Decides To Keep It

Originally the sport car was listed as an asset to be liquidated.

by on Jul.10, 2009

Like Bob Lutz, the Viper he backed is not retiring.

Like Bob Lutz, the Viper he backed is not retiring.

Late this afternoon Chrysler Group LLC announced that production of the Dodge Viper SRT10 and its V-10 engine will continue at the Connor Avenue Assembly Plant, where they have been built since 1995.

In a bankruptcy court filing back in May the company said there was no taker for the sale of the car and its entire Conner Avenue plant for only $10 million, and listed Viper as an asset to be disposed of by the old company. Apparently a bid of some $5 million did not have financing behind it. See Viper video here.

As the bankruptcy proceeded the company changed its mind and transferred the business to the surviving Chrysler Group. These assets, besides the car, consist of a 392,000 square-foot plant in Detroit that occupies 27 acres. There, 115 employees assemble the Dodge Viper SRT10 Coupe and Roadster along with the the V-10 engine. 

It's as fast as a Viper!

It's as fast as a Viper!

There seems to be no downside to continuing for the moment. The Viper business earned $16 million in 2008 by building 1545 cars and engines. However, during 2009 only 120 Vipers have been built thus far in a plant that is capable of building eight cars a day during its single, 40-hour shift.


Chrysler’s Proposed Viper Sale Has No Takers

Bankrupt company offered the entire plant for only $10 million.

by on May.27, 2009

No takers for the Viper business means sales of other Chrylser and GM brands are difficult, if not impossible.

No takers for Viper means sales of other Chrysler and GM brands are difficult, if not impossible.

In a bankruptcy court filing Robert Nardelli, CEO of Chrysler LLC, says that the company recently offered for sale its entire Conner Avenue plant in Detroit, the facility that manufactures Dodge Vipers and engines,  and the entire Viper business for only $10 million.

The 392,000 square-foot plant occupies 27 acres where 115 employees assemble the Dodge Viper SRT10 Coupe and Roadster and their V-10 engine. The Viper business earned $16 million in 2008.

Chrysler received “no purchaser interest,” in what amounted to a fire sale of the sports car line.

The lack of any interest whatsoever demonstrates just how depressed the market is for automotive assets of any kind, and it has direct implications for General Motors as it struggles to sell its Saturn, Opel, Saab, and Hummer brands to raise cash and trim its bloated product portfolio.

One of the core arguments of bondholders, who oppose the U.S. Treasury Department imposed restructurings of both companies, is that they would be better off if the companies were broken up. If there are no buyers ,then this speculative assertion is demonstrably false, legally allowing the proposed restructurings to go forward.

A hearing is going on right now in the U.S. Bankruptcy Court in  New York as to whether Fiat’s takeover of Chrysler can proceed by transferring Chrysler assets to the Turin-based small car maker over the objections of bondholders and other creditors.

Subscribe to TheDetroitBureau.comIt is Nardelli’s sworn testimony that the objecting bondholders “simply ignore the fact that the U.S. Treasury Department was the only lender willing to invest in us. As credit markets tightened and automotive sales deteriorated in the fall of 2008, Chrysler suffered a severe liquidity crisis. We were unable to obtain financing from banks or other traditional sources. As a result, and as a last resort, Chrysler approached the United States government for financial support,” Nardelli said.    (more…)

Gunfight Looming Between Politicians, Banks and Treasury at the Chrysler Corral

Secured debt might not be so secure if the government forces bankruptcy or politics intrude.

by on Apr.23, 2009

Is Citibank being a piggy bank in its demands for worthless Chrysler bonds?

Are Citibank and others being piggy banks by demanding too much for worthless Chrysler bonds?

Chrysler LLC’s creditors will have to make a judgment soon on whether they accept an offer to exchange their debt for equity in the company for pennies on the dollar or risk a political showdown over whether to force the company into bankruptcy.

Michigan’s Democratic Governor Jennifer Granholm and the state’s Republican Attorney General in a rare agreement have in recent days characterized the battle over debt and bankruptcy as a struggle between Wall Street and Main Street. Cox has accused Steve Rattner, the head of President Obama’s Auto Task Force of favoring a Wall Street-oriented solution at the expense of small businesses, retirees and workers in Michigan.

Rattner has a New York banking and financial services background, and Rattner himself is under investigation for bribing New York politicians to secure lucrative pension fund management contracts for his firm.

Chrysler’s creditors have proposed forgiving a very small part of their stake in return for as much 40% of the equity in a reorganized Chrysler. In addition, the creditors also are asking Fiat, Chrysler’s potential Italian partner, to invest cash in Chrysler. So far, Treasury has countered with far less cash, about $1 billion, and only 5% of the equity in the re-organized company. Expect this to go back and forth right  down to the deadline. (more…)

Chrysler Bondholders May Be Ready to Settle

But still more roadblocks could scuttle automaker's rescue plan.

by on Apr.21, 2009

Why is this man smiling? Whether Chrysler survives or fails, CEO Bob Nardelli is not likely to remain at its helm.

Why is this man smiling? Whether Chrysler survives or fails, CEO Bob Nardelli -- shown here with a picture of legendary CEO Lee Iacocca -- is not likely to remain at its helm.

One of the most pressing obstacles in the way of a Chrysler rescue plan could be resolved, according to reports circulating in Detroit circles.  If accurate, the automaker’s lenders will be willing to swap $2.5 billion of its $6.9 billion in secured debt for equity in a new company that would be formed by a proposed partnership between Chrysler LLC and the Italian carmaker Fiat SpA.

First reported in the Detroit Free Press, various sources now indicate the leaders of a group representing Chrysler’s bondholders made the counter-offer to Chrysler and the U.S. Treasury Department on Monday night.  The debt holders had previously rejected a plan to take $1 billion in cash to wipe out Chrysler’s debt.  Treasury officials overseeing the automaker’s rescue plan had been hoping to ultimately eliminate two-thirds of Chrysler’s debt.

A senior Chrysler spokesperson declined comment, Tuesday evening.  There’s also been no word from the Treasury Department.