Just in...Chrysler reaches deal with CAW

OntarioVanMan · Apr 24, 2009

Tony Van Alphen

Business Reporter

Chrysler and its union have broken historical pattern bargaining in the auto industry with a deal for deep worker concessions to keep the teetering company alive here.

In around-the-clock, high-stakes bargaining, negotiators agreed on a deal Friday night for much more concessions than what workers accepted at General Motors, another reeling automaker, last month.

Ken Lewenza, president of the Canadian Auto Workers, also revealed if Chrysler slips into bankruptcy court protection in the U.S. and Canada, operations here would not be liquidated and remain among the company's "good" operating assets. Workers would also not face further concessions if there is a bankruptcy, he said.

Wheels.ca - Chrysler reaches deal with CAW - Canada's Most Trusted Auto Resource

greg334 · Apr 25, 2009

It won't help, Chrysler will be closing Canadian operations within a few months after they file for bankruptcy and sell off their assets.

OntarioVanMan · Apr 25, 2009

greg334 said:
It won't help, Chrysler will be closing Canadian operations within a few months after they file for bankruptcy and sell off their assets.

Nice interjection or opinion..but that is not what the agreement says......Guess we'll have to wait and see which way the worm turns...

greg334 · Apr 25, 2009

OVM,
The agreement means nothing if the company shuts down. They, the CAW and the workers will be out of a job, the parent company Chrysler will sell off the Canadian company and no one will get anything except the creditors. The CAW has no way to guarantee anything when it hits the courts, Chrysler can not tell the court what they want to honour and what they don't at that point, the creditors hold the power to collect on the debt, not the company and surely not the union.

chefdennis · Apr 27, 2009

Yea they reached an agreement woth the union BOSSES, they still need the members to agree to it. They have also reached and agreement with the UAW union BOSSES, but again, they still need the rank and file to agree, so they have scheduled votes and until they are in, these agreements mean nothing.

Now beyond that, as was said in a Bankruptcy, the agreements don't mean a thing, the court can keep them in place or toss them, it is strictly a call by the court.

But, the bigger issue is they still do not have any agreement with the BOND HOLDERS....... most of these bigger boindholders have their investments insured, so if the company is in BK, the insurance oays off and they make out totally by the payout from those insurance companies, why do you think the bond holders wouldn't take the approx $.15 on the dollar that the Fed gov. wanted them to take, the insurance payout far exceeds that.

That being said, even if Chysler has to file BK, the bond holders would make out better by forcing a total liquidation and "sell off" of the profitable units of the company (jeep and dodge) , while not as much as the insurance, they would recover more then the FED Gov wants them to take.

The only one that stands to make anything of this is FIAT, they will get an operation stake and from what i have read a 20% stock holding, without any real cash of their own invested... and they can thank our FED Gov for that by tell chysler they had to deal with fiat....Hell they can tell all of them to stick any deal that comes anong up to the last moment ...force a BK, and gin operational control of the chysler for next to nothing, all with the blessings of our FED Gov and Barry and turbo Tim.........

Chrysler creditors urged to make concessions

Sun Apr 26, 2009 1:15am EDT
By Nick Carey
http://www.reuters.com/article/ousiv/idUSN2529726020090426

DETROIT (Reuters) - With just days to go for Chrysler LLC to reach agreements to cut labor and debt costs or face bankruptcy, members of Michigan's Democratic congressional delegation said on Saturday the onus was now on the U.S. automaker's creditors to make concessions.
"The unions have come to the table over and over and over again and have taken huge cuts," said Senator Debbie Stabenow on the sidelines of a Michigan Democratic Party fundraising event in Detroit, the heart of the beleaguered U.S. auto industry.

"It is now incumbent on the creditors, in particular those that have taken public funds, to make some concessions and be a part of the solution," Stabenow said.

Chrysler, which is about 80 percent-controlled by private-equity firm Cerberus Capital Management LP , faces a Thursday deadline by the Obama administration to reach cost-cutting deals and cement an alliance with Italian carmaker Fiat SpA.

If the automaker fails to do that, Chrysler could see further U.S. government support withheld and face potential liquidation.
Michigan Democrats said the announcement on Friday of a tentative concession deal between the Canadian Auto Workers union and Chrysler showed the unions were acting in good faith and it was now up to the creditors to follow suit.

The CAW deal would reduce hourly labor costs by C$19 ($15.70) and save Chrysler about C$240 million annually in benefits, time off, "legacy costs" and improved productivity, but not through lower base wages or reduced pensions.

That deal will be put to CAW-represented workers for ratification this weekend.

Talks on concessions between the United Auto Workers union and Chrysler continued on Saturday. UAW President Ron Gettelfinger had been due to attend the fundraising event, but canceled his appearance because of the talks with Chrysler.

'NEW BATTLE LINES'

The U.S. auto industry has suffered from its worst sales in decades, with the recession and the credit crunch taking a heavy toll. Like Chrysler, General Motors Corp has received government aid. Ford Motor Co, the third member of the storied Big Three U.S. auto makers, has said it can restructure its business without government help.

"The unions have made a number of concessions to ensure the survival of Chrysler," said Representative Mark Schauer. "The question now is what the company's creditors will do."

"They have to look at the broad economic impact (of Chrysler collapsing) and not just their own short-term financial interest," he said.

In an impassioned speech to cheering attendees at the fundraising dinner, Michigan Democratic Governor Jennifer Granholm criticized Chrysler creditors that had received bailout money as part of the U.S. government's efforts to prevent a collapse of the financial system.

Those same banks and hedge funds have reported profits for the past few months, she said.

"This is going to be a tough week and new battle lines have been drawn," Granholm said. "Who knew they (Chrysler's creditors) would take that bailout money and then kill this great industry?"

Although Senator Carl Levin promised the audience that "we're doing everything we can to make sure they (auto workers) don't get sold out, Michigan Democrats said bankruptcy for the automaker could not be ruled out.

"If it comes to the liquidation of Chrysler as we know it, then we will push urgently for a rapid restructuring of the company," Schauer said. "There are too many jobs at stake."

Let them fail............

OntarioVanMan · Apr 27, 2009

The rank and file voted yesterday in Canada and accepted the deal....

Which in essense forced the UAW here to accept a deal or they would have the option to close or go BK in the US and only produce in Canada.....

BUT like Dennis said it's all up up the bondholders now...

chefdennis · Apr 28, 2009

It looks like barry and his minions are leaning all over the TARP fund banks really hard.

This article sayes that the big 4 banks (those that have taken the bulk of the TARP FUNDS) have agreed to some cash and up to a yet to be determined amount of stock, the tresury still has to convince the other 42 lenders and hedgefunds that control the balance of the debt....it ain't a done deal yet...but who knows:

http://www.theglobeandmail.com/servl...Story/Business

U.S. reaches key deal with Chrysler bondholders

Reuters, The Associated Press
April 28, 2009 at 11:25 AM EDT

WASHINGTON — The U.S. Treasury has reached an agreement in principle with Chrysler LLC's first-lien lenders that may help the troubled auto maker avoid bankruptcy, two people briefed on the discussions said on Tuesday.
The terms of the high-stakes debt restructuring deal were not immediately available, and representatives of Chrysler, the lenders and the Treasury could not be immediately reached for comment.
Under the agreement, the four banks will forgo claims to the $6.9 billion worth of Chrysler debt they hold in exchange for $2 billion in cash when the deal closes, says one person familiar with the matter, speaking on condition of anonymity because the agreement has not been formally announced.
The person says Treasury needs to convince all 46 banks and hedge funds that hold Chrysler debt to go along. If not, a bankruptcy filing could still be possible for the nation's third largest auto maker.

The news comes as Chrysler races to meet a deadline of April 30 to complete an alliance with Italy's Fiat SpA and follows an announcement by Chrysler that it has also reached an agreement with the United Auto Workers leaders to modify the union's labour contract and to reduce the amount that the company owes a retiree health fund.
The negotiations between Chrysler's lenders and the UAW had played out in parallel because creditors were wary of the risk that the Obama administration's autos task force would try to force a settlement that favoured the union.
The committee of Chrysler's lenders including JPMorgan Chase & Co, Goldman Sachs Group Inc., Morgan Stanley and Citigroup Inc. last week proposed taking $3.75-billion in debt and a 40 per cent equity stake in a restructured company.
That was above an offer of $1.5-billion in debt and a 5 per cent equity stake from Treasury Department officials.
U.S. officials had been expected to make a new offer on Monday to the lenders' group representing about 45 institutions, including some hedge funds, that hold the secured debt of the struggling auto maker.
In contrast to the banks, some of the funds had held out for a higher settlement and had argued that Chrysler's secured debt had to be paid out at a higher return than what was offered to the UAW for its unsecured health-care-related claim.
That stance had come under fire from members of the Michigan congressional delegation and Michigan Gov. Jennifer Granholm who said the creditors were holding out for an unfair payout that threatened to bankrupt Chrysler and scuttle its planned alliance with Fiat.
Over $4-billion of Chrysler's total first-lien debt is still held by the major banks led by JP Morgan, people familiar with the matter have said.
Chrysler has been kept afloat with $4-billion in federal loans since the start of the year and could get another $500-million before its month-end restructuring deadline established by the autos task force.
The task force, which is headed by former investment banker Steve Rattner, has said it is willing to invest another $6-billion in Chrysler if the struggling auto maker can complete the Fiat alliance and agreements to cut debt and costs with its creditors and major unions.