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FACTBOX - Details of Chrysler bankruptcy and restructuring plan
April 30, 2009 / 5:38 PM / in 8 years

FACTBOX - Details of Chrysler bankruptcy and restructuring plan

(Reuters) - The Obama administration summarized its plan for Chrysler’s Chapter 11 bankruptcy and Chrysler’s alliance with Fiat as follows:

BANKRUPTCY

* Chrysler will use Section 363 of the federal bankruptcy code to “clear away the remaining impediments” to its restructuring.

* New Chrysler will buy all assets of old Chrysler out of a Chapter 11 bankruptcy case in exchange for a $2 billion (1.35 billion pound) payment to secured lenders.

* New Chrysler will create an independent trust to provide healthcare for Chrysler retirees, funded by a note of $4.6 billion payable over 13 years with a 9 percent rate of interest. It will receive 55 percent of equity of the reorganized Chrysler and will have the right to choose one director.

* U.S. Treasury gets 8 percent of equity in new Chrysler and right to choose four company directors.

* Governments of Canada and Ontario (the national government and government of the province) will together get 2 percent of equity in new Chrysler.

* The U.S. government will stand behind Chrysler’s efforts to use our bankruptcy code to clear away remaining obligations.

CHRYSLER-FIAT DEAL

* The alliance creates 6th largest global automaker.

* Fiat brings “billions of dollars” in technology to help Chrysler build more fuel-efficient cars in U.S. factories.

* Fiat has right to choose three Chrysler directors. It can earn up to 15 percent in additional equity in three tranches of 5 percent for meeting targets such as producing a vehicle that performs at 40 miles per gallon from a U.S. factory.

CREDITORS

* Chrysler’s largest secured creditors agreed to exchange their portion of $6.9 billion debt for a pro-rata share of $2 billion in cash.

* United Auto Workers union made concessions on wages, benefits and retiree healthcare that will help save jobs and make Chrysler more competitive.

* Daimler, a minority shareholder in Chrysler, will waive its share of Chrysler’s $2 billion of second lien debt, give up its 19 percent equity interest, and pay $600 million to Chrysler’s pension funds.

* Cerberus will waive its share of Chrysler’s $2 billion of second lien debt and forfeit its entire equity stake in Chrysler.

U.S. GOVERNMENT

* The U.S. Treasury will lend up to $6 billion to the Chrysler-Fiat alliance through its restructuring period.

* The government is prepared to provide $3.3 billion debtor-in-possession financing through Chapter 11 proceeding.

* The government is prepared to lend $4.7 billion to the new Chrysler in the form of a term loan with $2.1 billion due in 30 months. Half of the balance will be due on the 7th anniversary, and the remainder will be due on the 8th anniversary of the loan. There is an additional note of $288 million, which is the government’s fee for making the loans.

DEALERS, CUSTOMERS

* GMAC will provide dealer and customer financing, and continue to do so after Chrysler emerges from bankruptcy. The U.S. government will provide capitalisation that GMAC requires to support the Chrysler business.

* Chrysler will honour consumer warranties. The U.S. Treasury is making $280 million available as a backstop on the orderly payment of warranties for cars sold during the restructuring period.

SUPPLIERS

* Chrysler will seek authority at its first bankruptcy hearing to continue to pay suppliers, and the U.S. Treasury supplier support program will continue to operate.

Compiled by Julie Vorman; Editing by Toni Reinhold; julie.vorman@thomsonreuters.com, +1 202 898 8467

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