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UPDATE 1-Obama optimistic Chrysler will be viable
April 30, 2009 / 1:29 AM / 8 years ago

UPDATE 1-Obama optimistic Chrysler will be viable

* Obama says debtholders appear ready to make concessions

* Obama says Chrysler bankruptcy contingency necessary

* Obama believes GM can emerge from restructuring

(adds GM, bankruptcy contingency)

WASHINGTON, April 29 (Reuters) - U.S. President Barack Obama said on Wednesday he was optimistic that Chrysler would be able to restructure and emerge as a viable company but the possibility of bankruptcy remained.

Speaking at a White House news conference one day before a government-imposed deadline for the distressed automaker to show it can survive, Obama said it appeared Chrysler was close to obtaining concessions necessary to overhaul its business and complete a proposed alliance with Italy’s Fiat FIA.MA.

“The details have not been finalized so I don’t want to jump the gun, but I‘m feeling more optimistic than I was about the possibilities of that getting done,” Obama said.

Although major debtholders “appear ready to make concessions,” Obama said Chrysler’s bankruptcy contingency planning was a prudent step. He did not rule out a possible Chapter 11 filing.

A government task force led by the White House and Treasury Department has determined Chrysler cannot survive without a Fiat deal and described potential bankruptcy as a surgical step to any address lingering financial issues.

The United Auto Workers union has already agreed to sweeping givebacks.

“Even if they ended up having to go through some sort of bankruptcy it would be a very quick type of bankruptcy and they could continue operating and emerge on the other side in a much stronger position,” Obama said.

He also expressed support for government-subsidized restructuring at General Motors Corp (GM.N), saying he thinks the company can again become competitive.

The government has already sunk $4 billion into Chrysler and $15 billion into GM and would essentially own GM under the company’s proposed restructuring plan.

Nevertheless, Obama said he does not want to micromanage the industry and the government would seek private investors for its stake once the companies were stabilized and industry sales rebounded.

“I would love to get the U.S. government out of the auto business as quickly as possible,” Obama said.

Reporting by John Crawley; Editing by Eric Beech

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