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New Plan: Car Guys to Run Car Company, Capital Management Company "Wiped Out"

Sarah's picture
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Or so says the current take on the Chrysler restructuring.

Chrysler's creditors would get $2 billion in cash and no equity stake. The automaker's current owner Cerberus Capital Management would be wiped out.

From my point of view this is the best possible thing, given that Cerberus is not only not a car company but has a history of destroying companies

in order to "strip" assets and sell off pieces.

The ownership of the new company would be divided between the union's retiree health fund, which would get a 55 percent stake, Fiat, which would get at least a 35 percent stake, and the United States, which would take an 8 percent stake. The Canadian government would receive two percent.

President Obama said today that the merger could save the company by giving Chrysler technology to build greener cars. Eh. But the President also suggested that further concessions for the company's survival don't need to come unilaterally from the unions henceforward.

"One of the potential advantages of a merger is new technologies where Chrysler starts making fuel-efficient, clean-energy cars that'll meet the needs of future markets," said President Obama at a town hall meeting in Missouri today.

The president told the crowd that he was unsure whether Chrysler will avert bankruptcy. He said the union has already made "enormous sacrifices to try to keep the company going."

"One of the key questions now is, are the bondholders, the lenders, the money people, are they willing to make sacrifices as well?" Obama said.

It's not exactly putting the financial overlords on notice, but it is pointing out the need for them to step up and help save the country that's made them rich.

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Submitted by jawbone on

being put so heavily into this. I wonder what protections they have.

Anyone here know how well employee funds/unions have done when they put their monies into trying to keep their companies afloat, keep their jobs? I seem to recall that airline employee's unions didn't get too much out of their somewhat coerced "investments" into airlines. Never made whole, never had their pay give-backs returned, etc. Also, that getting a seat (singular) on a board doesn't seem to do all that much for the workers....

But, Cerberus out? OK by me.

DCblogger's picture
Submitted by DCblogger on

you really have to wonder about investors who would invest in a company called hell hound.

Damon's picture
Submitted by Damon on

Indeed, it's great that Cerberus has been cut off, and just as good that Daimler recently cut a deal to get out of Chrysler, totally, as they'd always been a neglectful or abusive spouse in that relationship. But, I too am also concerned about the VEBA being burdened with the company, especially after Obama made it clear that he isn't exactly optimistic about the future of the company. So, if it does go bankrupt, I also wonder exactly who'll get their money back. If I was more tin foily, I'd conjecture that the UAW is being set up to take what will have then been an engineered fail.