U.S. pressing automakers’ creditors
The U.S. government is pressing creditors to accept cuts in General Motors Corp. and Chrysler LLC debt to avoid automaker bankruptcies, sources said.
Sources told The Wall Street Journal that the U.S. Treasury considered a previous GM offer to bondholders of about $8.5 billion in cash and new debt and 90 percent of the company stock too generous.
At Chrysler, the government is pressing creditors, who are owed nearly $7 billion, to accept about 85 percent of that, the Journal said.
But, some creditors said they believe they would get 70 percent of their investment back if the company filed for bankruptcy.
Chrysler, controlled by Cerberus Capital Management LP, said a liquidation sale would end with senior secured lenders recouping between 11 cents and 43 cents on the dollar, the Journal said.
Treasury officials are to meet with bondholder groups in Detroit within the week.
The government, which has loaned the two companies $17.4 billion, has given Chrysler until the end of April to re-negotiate with bondholders and the United Auto Workers Union. GM has until the end of May to reach bankruptcy-averting concessions.