It is difficult not to be entertained by the coverage on the meteoric plunge towards bankruptcy that is Chrysler. The Journal article is pretty circumspect about some rather important details, failing even to mention bondholders until the 18th paragraph in a 19 paragraph article. The deep and heartfelt sacrifices the UAW is making are front and center:
The United Auto Workers union would eventually own 55% of the stock in a restructured Chrysler LLC under the deal reached by the union and the auto maker, according to a summary of the agreement that was reviewed by the Wall Street Journal.Fiat SpA "eventually" will own 35%, and the U.S. government and Chrysler's secured lenders together will end up owning 10% of the company once it is reorganized, that summary said.
Hmmm, employee owned and operated. Where have we heard that before?
The Washington Post, however, claims to have the scoop on bondholders with:
The Treasury Department reached an agreement with Chrysler's creditors late last night that may prevent the troubled automaker from going into bankruptcy, a source familiar with the matter said this morning.The carmaker had owed a fractious group of 45 banks, hedge funds and other firms about $6.9 billion. These creditors have agreed to write down the debt to $2 billion, the source said.
As long as one can watch from a distance, this charade is quite entertaining.
UAW to Get 55% Stake in Chrysler for Concessions [The Wall Street Journal]
Chrysler Creditors Agree to Deal With Treasury [The Washington Post]
Posted by guest , Apr 28, 2009 10:18AM
Are they changing the name to the Twentieth Century Motor Company?
Who is John Galt?
Posted by sugardaddy , Apr 28, 2009 10:29AM
@1 did you see their new invention? It is a motor that runs solely on dollar bills. It will revolutionize the industry and it is green so the admin likes it.
Posted by Anal_yst , Apr 28, 2009 10:35AM
Yes, give control of the company to the Unions.
I give them 12 months, TOPS, before they're back nudging up for a suckle at the Government teat.
Posted by guest , Apr 28, 2009 10:48AM
lenders are going to accept write down to $2 bn and less than 10% equity...
i'm skeptical that dimon and the hedge funds would accept this, even if citi, gs, and ms would.
Posted by guest , Apr 28, 2009 10:49AM
I think employee owned companies are the best run companies on the planet. Get a grip, is not united still in business?
When everyone feels apart of the business the mindset will change. It will not be a us(union) vs them mentality, they will be in same boat or sink.
Posted by guest , Apr 28, 2009 10:52AM
"Among the cost-cutting measures that the UAW leaders have accepted are a suspension of cost-of-living-adjustments and new limits on overtime pay. Workers will only be paid for overtime after they have worked at least 40 hours in a week"
I don't even really have a comment other than how the fuck did they get that in the first place.
Posted by guest , Apr 28, 2009 10:56AM
Yeah, because companies that aren't employee owned and run are so much better?
That said, anything run by the UAW will be a gigantic clusterfuck. The toilet boy will have 20 weeks vacation and pulls down 250K.
Posted by guest , Apr 28, 2009 10:58AM
Erin's new funbags are on display today.
Posted by chernevik , Apr 28, 2009 11:02AM
If Chrysler's secured creditors don't like the deal, can they force liquidation? Or could a judge cram down their debt to 5-10%, even if they could get more in liquidation?
Posted by guest , Apr 28, 2009 11:03AM
@7....so Lehman was run by the UAW???? Are you shitting me???
~The Forehead Slapper
Posted by guest , Apr 28, 2009 11:06AM
this is too much. i can see why the journal is now including lines of blow with every saturday paper.
Posted by guest , Apr 28, 2009 11:24AM
Erin and Bess - someone should do some research on whether the creditors hedged their loans with CDS and what effect, barring a government intervention, a BK filing would have on those CDS. Also, it would be interesting if AIG was the counterparty to any such CDS.
I don't know how one would go about doing that research, but it would be an interesting angle to pursue if possible.
Posted by guest , Apr 28, 2009 11:34AM
@5 you are a hipeee loser. We have always been in the same boat as the UAW since we all pay taxes and live here. The problem is they never gave a shit about anyone else as they sucked every last dollar out of the company. It should have been a hint and half for their ass when Benz walked from them as fast as possible after they totally fucked that brand for the 2 years they were one company. If there was every a poster for shitty manufacturing and compliance the S500 was the worst car ever turned out by Benz and it was while these asshole were building it.
If the UAW doesnt give a shit about the company simply because they are employed by it and are getting paid by them then they deserve to lose their jobs. Giving them ownership only strengthens their ability to suck more money out of the US tax payer. Close the company! The cars suck shit.
Posted by guest , Apr 28, 2009 11:36AM
@13 testify!
Posted by guest , Apr 28, 2009 11:38AM
@9 -- secured creditors can't be forced to accept anything usually because they're secured...but in this case it looks like they have decided to swap down
Posted by guest , Apr 28, 2009 11:46AM
@ 5 -- That would be true if the Unions didn't feel their company was bulletproof from liquidation, which it is since they're best-buds with the Obama Administration and our tax money.
They can just drag along and get bailouts every 3 months -- just so long as there are 2 vehicles in the driveway and a big roof over their heads, they'll have no qualms about forcing the gov to keep ponying up dough.
All this is amounts to is the dwindling # of taxpayers putting food on the table for these incompetants in Michigan.
Posted by guest , Apr 28, 2009 12:00PM
UAW = Ramora/Tick/Leech. They need the host to stay alive for as long as possible to continue sucking it dry - and in a "Count Dracula" sort of way, not in a "Client #9" sort of way.
Posted by guest , Apr 28, 2009 12:08PM
But Detroit is such a great city!
I mean look at the elected officials and the sports teams!
Who wouldn't want to live there?
Posted by guest , Apr 28, 2009 12:10PM
@13: I think you meant "h-i-p-p-i-e" not "hipeee". Have you had your Ensure today?
Posted by guest , Apr 28, 2009 12:20PM
Since everyone here is such great analysist, tell me again why Benz bought the turd Chrylser in the first place? Its amazing that Benz got fooled and then ran away.
Now your saying that the UAW does not want to get their hands dirty by actually doing some work? These people like jobs just as much as Wall Street turds and they will be motivated just as much as people on Wall Street.
Lets just watch and see if they turn it around. I think they will turn it around, the UAW.
I am not biased, I have seen the laziness of the UAW first hand, have visited many auto plants. UAW workers need a kick in the pants, a wake up call or its over and they will go down like Chrysler.
Posted by guest , Apr 28, 2009 12:24PM
Is Credit Suisse even prestigious anymore?
Posted by guest , Apr 28, 2009 12:28PM
all your equity are belong to us.
Posted by Debter , Apr 28, 2009 12:29PM
does change of ownership (55% to UAW) trigger anything on the debt/ cds/ etc... I know some contracts do get structured that way.
Posted by guest , Apr 28, 2009 12:40PM
@15 - that is just plain wrong. In chapter 11, secured creditors can in fact be crammed down, and forced to take treatment that they do not want. In short, as long as the plan proponent can prove that the secured creditors are getting a new secured claim equal to the value of their collateral, and interest at a market rate, the secured creditor can get crammed down
Posted by guest , Apr 28, 2009 1:03PM
@ 24: Absolutely correct, although this negotiated solution certainly seems worse than bankruptcy treatment for priority of claims.
Who needs contract law anyway?
Posted by guest , Apr 28, 2009 3:55PM
Is EP Chinese?
Posted by guest , Apr 28, 2009 5:58PM
GM and Chrysler are now Properties Of The State. Ford is the odd man out...too bad, Ford, you missed a golden opportunity to be rebranded as Victory Automotive, featuring Chevy, Cadillac, and Jeep!