LANSING – With just three weeks left for Chrysler LLC to meet a deadline set by President Barack Obama to finalize an arrangement with the Italian auto-maker Fiat, Gov. Jennifer Granholm has called on those that hold the car company’s debt to agree to concessions on those bonds. Speaking in Washington, D.C., Granholm said the future of the smallest car company could depend on their cooperation.
There are four banks that hold $6.18 billion in first-lien debt with Chrysler. Those banks have also received a total of $70 billion in federal monies through the Troubled Asset Relief Program. If Chrysler files for bankruptcy protection, these bondholders could seize and sell Chrysler assets, like factories and real estate.
It is right, Granholm said, for those banks to “take a haircut for this industry and certainly Chrysler, to survive,” Granholm said.
She was in Washington for a Newsweek Magazine-sponsored program on the future of the auto industry. She next travels to Texas to talk to several companies, including a wind turbine manufacturer, about locating facilities in the state.
Last week, Obama said Chrysler must reach an accord with Fiat in 30 days or go through bankruptcy reorganization. He also gave General Motors 60 days to reorganize or also go through bankruptcy.
Since it is clear an arrangement with Fiat is the only future for Chrysler, the bondholding banks should not block that, Granholm said.
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