Wednesday, June 10, 2009

Fiat urges Supreme Court not to delay Chrysler deal

David Silver, automotive analyst for WStreet.com, said the development could spell disaster for GM.

"Now, all sides will not only be worried about emerging quickly, but they will also be worried about doing it right," he said.

If the Chrysler sale does goes through as is still widely expected, Fiat would own 20% of new Chrysler, with the option of increasing its stake to as much as 51%.

A health-care trust controlled by the United Auto Workers union would initially get 55% of the equity and would get a $4.5 billion note. The union has a $10.5 billion unsecured claim against Chrysler.

In addition, senior lenders are owed $6.9 billion and would receive $2 billion, or about 29 cents on the dollar, under the plan.

If Fiat's chief executive Sergio Marchionne is serious about turning Fiat into a global brand, Silver said that giving secured debt holders a little more money should not stand in the way.

"I hope that SCOTUS prevents the sale for a little while for the debt holders to get a little more because we aren't talking about hedge funds holding out for money here, we are talking about teachers and firemen and policemen," he said.

http://www.marketwatch.com/story/fiat-to-continue-quest-for-chrysler