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Chrysler-Fiat talks intensify, Saturn deal eyed

(Agencies)
Updated: 2009-04-16 16:45

If GM and Chrysler fail to meet the deadlines imposed by the task force, the two automakers could be forced into bankruptcy. GM would be expected to attempt to reorganize and emerge as a smaller company. Chrysler executives have indicated the automaker would be liquidated if it fell into bankruptcy.

Chrysler President and Vice Chairman Jim Press discusses the new Jeep Grand Cherokee at the New York International Auto Show Wednesday, April 8, 2009 in New York. [Agencies]

GM must cut about $28 billion of unsecured debt more deeply than the two-thirds reduction previously targeted. Chrysler is tasked with eliminating most of a $7 billion first-lien term loan that stems from its split from Daimler AG in 2007.

Related readings:  Report: GM told to prep for bankruptcy filing  GM, Chrysler launch aid schemes for suppliers  Retirees fear GM failure fallout  GM CEO softens company's opposition to bankruptcy

Those targets have proven to be major obstacles for GM and Chrysler. Chrysler lenders did not present a counteroffer and there were no new talks between GM and its bondholders on Wednesday, people familiar with both talks said.

A steering committee for the Chrysler lenders confirmed on Wednesday that it had been expanded to include Oppenheimer Funds, Perella Weinberg Partners and Stairway Capital. Sources had told Reuters on Tuesday of those additions and of Elliott Management, which was added last week.

Those members are added to the committee which includes Citigroup, Goldman Sachs, JPMorgan Chase and Morgan Stanley.

Automakers are struggling through a deep global downturn in sales driven in part by tight credit conditions and economic slowing in key regions such as North America and Europe.

The stress has filtered down to the thousands of companies that supply components to automakers, leaving many at risk for bankruptcy in coming months. The US Treasury has pledged up to $5 billion of loans to support the supplier sector.

On Wednesday, Noble International Ltd, which supplies structural components to the auto industry, filed for bankruptcy protection, citing a substantial drop in demand from customers and frozen credit markets.

Noble said it had negotiated debtor-in-possession financing with certain customers and hoped to use Chapter 11 protections to pursue sales of its remaining operations.

The global car industry is showing no convincing signs of recovery yet as sluggishness in developed economies has deeply dented demand, Hyundai Motor Group Vice Chairman Lee Hyun-soon said on Wednesday.

Auto markets in China, India and Brazil should outperform, helped by government incentives, growing incomes and faster economic recovery, Lee told Reuters in an interview. The group owns South Korea's top two auto makers: Hyundai Motor Co and Kia Motors Corp.

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