The "NEW" Chrysler 06/10/09-

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Chrysler Financial, Old CarCo repay $1.9 Billion loan
May 17th, 2010

The U.S. Department of the Treasury today announced that it has received a $1.9 billion repayment from Chrysler Holding (CGI Holding) in settlement of one of the loans that the Treasury Department extended to finance Chrysler LLC, the “Old Chrysler” automobile company. This repayment, while less than the $4 billion face value, is significantly more than the Treasury expected to recover on this loan and is greater than an independent valuation of the loan provided by investment banking firm Keefe, Bruyette and Woods, which was hired by Treasury in connection with the transaction.

As a result of the repayment, CGI Holding and Chrysler Financial no longer have outstanding obligations to Treasury under the Troubled Asset Relief Program (TARP).

The loan was originally made on January 2, 2009 to Chrysler Holding, the parent company of Old Chrysler. The loan went into default when Old Chrysler filed for bankruptcy in April 2009.

In June 2009, the assets of Old Chrysler were sold to New Chrysler pursuant to the bankruptcy court proceeding. The loan was reduced by $500 million as “New Chrysler” assumed that amount of the debt. The liquidation of Old Chrysler was recently completed and did not result in any recovery on the loan.

CGI Holding was the owner of both Chrysler Financial and Old Chrysler. The loan also provided for potential recoveries from Chrysler Financial consisting of the greater of $1.375 billion or 40 percent of any distributions that Chrysler Financial made to CGI Holding. Because of the uncertainty regarding the amount and timing of any income distributions by Chrysler Financial that would be applied to the loan, Treasury had not expected a material recovery on the loan.

Separate from this loan and payment, in January 2009 Treasury also provided a $1.5 billion loan to Chrysler Financial to enable it to finance the purchase of Chrysler vehicles by consumers. This loan was fully repaid with interest in July 2009. A separate debtor-in-possession loan of $1.9 billion provided by Treasury to Old Chrysler, on which Treasury had not expected any recovery, was extinguished last month in the liquidation. Treasury retains the right to recover the proceeds from the sale of specific collateral attached to that loan.

CGI Holding has no ownership interest in Chrysler Group LLC, the “New Chrysler,” and Treasury’s investments in New Chrysler are not affected by today’s repayment. Those investments consist of 9.9 percent of the equity and $7.1 billion of loans including undrawn commitments.

Of the $14.3 billion in loans to Old Chrysler, New Chrysler and Chrysler Financial outstanding at various times under TARP (includes undrawn commitments), Treasury has received $3.9 billion to date. Treasury also retains the investments in New Chrysler described above.

Total TARP repayments now stand at $189 billion – well ahead of last fall’s repayment projections for 2010.

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Chrysler 8, Dealers 1
May 22, 2010

Chrysler is doing better than GM. At least when it comes to winning arbitration cases brought by culled dealers. GM lost both cases brought against them. Chrysler bats much better.

Out of nine arbitration cases brought so far by eliminated dealers, Chrysler won 8, reports Automotive News [sub]. This week alone, Chrysler won three. The unlucky dealerships were Hinckley Dodge in Ogden, Utah, Tenafly Chrysler Jeep in Tenafly, N.J., and Midway Motors in Framingham, Mass. Out of the 9 cases that have been decided, Florida’s Deland Dodge was the only dealer to prevail.

After going bankrupt, Chrysler terminated 789 dealers last year. In December, law was passed to give any rejected dealers of Chrysler or GM the right to seek arbitration.

Chrysler reinstated 36 dealers and sent letters offering reinstatement to 50 more. Approximately 400 Chrysler dealers initially went for arbitration. That number dwindled to less than 250, as cases were withdrawn, dismissed, or settled.

LINK: Chrysler 8, Dealers 1 | The Truth About Cars

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Chrysler Group LLC Continues to Prevail in Vast Majority of Dealer Arbitration Cases

* 27 determinations have been rendered to date
* 21 on behalf of the Company
* 6 on behalf of arbitrating dealers
* Fewer than 115 arbitration cases remain

Auburn Hills, Mich. , Jun 3, 2010 - The actions to reduce our dealer network were a necessary part of Chrysler Group’s viability and central to the interim financing and partnership with Fiat. The only alternative would have been complete liquidation, which would have resulted in all 3,200 dealers closing, hundreds of thousands of lost jobs, and the Company defaulting on taxpayer loans. While we are pleased that the decisions of many arbitrators reflect a keen appreciation of these circumstances, Chrysler Group is disappointed that some decisions undermine the Federal Bankruptcy Court Order that affirmed the rationalization process used to reject the dealership agreements. Despite this, we are confident we have the dealer network in place that allows dealers to be successful, which will result in greater investment in their communities, employees and customers and, ultimately will enable the Chrysler Group to repay the U.S. Taxpayers in a timely manner.

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Arbitration Update: Chrysler Group LLC Looking Forward to Moving Beyond the Arbitration Process

* Company continues to prevail in great majority of dealer arbitration decisions
* Meeting statutory requirement to provide prevailing dealers with Letter of Intent within seven business days, looking forward to further discussions with prevailing dealers
* Arbitrator decisions reflect understanding that Genesis Project and dealer network decisions essential to Company's future success

Auburn Hills, Mich. , Jul 2, 2010 -

Chrysler Group is looking forward to moving beyond the arbitration process and completing its dealer network plans. The Company is complying with the federal statute by issuing a customary and usual Letter of Intent to dealers that prevail in arbitration and is looking forward to discussions with prevailing dealers. These discussions are - and will remain - private business matters. The decisions to select dealers for the Company's right-sized dealer network were carefully considered as part of Chrysler's Genesis Project. Placing all four brands under one roof in modern facilities has already resulted in enhanced profitability for the Genesis dealerships. The decisions of a great majority of the arbitrators reflect the belief that the Company's dealer network decisions were not only appropriate, but essential to its future success.

About the process: While difficult, the actions to reduce Chrysler’s dealer network were a necessary part of its viability and central to the interim financing and proposed sale to Fiat. Among the requirements placed on Chrysler was to reduce its dealer network by 25 percent. As such, on June 9, 2009, Bankruptcy Court Judge Arthur Gonzalez approved Chrysler’s motion to “reject” the contracts of 789 dealers. In its approval, the Court concluded the Company used sound business judgment, and affirmed the rationale used by the Company to determine which dealers were affected. On December 16, 2009, the U.S. Congress passed H.R. 3288 enabling the 789 affected dealers to pursue binding arbitration in order to secure an opportunity to join Chrysler's dealer network. The bill stipulates that dealers who prevail in binding arbitration would receive a customary and usual Letter of Intent to enter into a sales and service agreement with Chrysler Group LLC provided they meet financial and operational prerequisites. In May, 2010 arbitration hearings began for 418 of the 789 affected dealers who opted into the binding arbitration process. It is expected the process will conclude in late July.

Results as of July 2, 2010: More than 125 of the 418 filed arbitration cases have been dismissed, withdrawn or abandoned, 66 decisions have been rendered by arbitrators to date wiith Chrysler prevailing in 49 cases. An undisclosed number of cases have been settled and about 15 cases still remain to be arbitrated.

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Arbitration Update: Chrysler Group LLC Looking Forward to Moving Beyond the Arbitration Process

* Company continues to prevail in great majority of dealer arbitration decisions
* Meeting statutory requirement to provide prevailing dealers with Letter of Intent within seven business days, looking forward to further discussions with prevailing dealers
* Arbitrator decisions reflect understanding that Genesis Project and dealer network decisions essential to Company's future success

Auburn Hills, Mich. , Jul 9, 2010 -

Chrysler Group is looking forward to moving beyond the arbitration process and completing its dealer network plans. The Company is complying with the federal statute by issuing a customary and usual Letter of Intent to dealers that prevail in arbitration and is looking forward to discussions with prevailing dealers. These discussions are - and will remain - private business matters. The decisions to select dealers for the Company's right-sized dealer network were carefully considered as part of Chrysler's Genesis Project. Placing all four brands under one roof in modern facilities has already resulted in enhanced profitability for the Genesis dealerships. The decisions of a great majority of the arbitrators reflect the belief that the Company's dealer network decisions were not only appropriate, but essential to its future success.

About the process: While difficult, the actions to reduce Chrysler’s dealer network were a necessary part of its viability and central to the interim financing and proposed sale to Fiat. Among the requirements placed on Chrysler was to reduce its dealer network by 25 percent. As such, on June 9, 2009, Bankruptcy Court Judge Arthur Gonzalez approved Chrysler’s motion to “reject” the contracts of 789 dealers. In its approval, the Court concluded the Company used sound business judgment, and affirmed the rationale used by the Company to determine which dealers were affected. On December 16, 2009, the U.S. Congress passed H.R. 3288 enabling the 789 affected dealers to pursue binding arbitration in order to secure an opportunity to join Chrysler's dealer network. The bill stipulates that dealers who prevail in binding arbitration would receive a customary and usual Letter of Intent to enter into a sales and service agreement with Chrysler Group LLC provided they meet financial and operational prerequisites. In May, 2010 arbitration hearings began for 418 of the 789 affected dealers who opted into the binding arbitration process. It is expected the process will conclude in late July.

Results as of July 2, 2010: More than 125 of the 418 filed arbitration cases have been dismissed, withdrawn or abandoned, 73 decisions have been rendered by arbitrators to date wiith Chrysler prevailing in 54 cases. An undisclosed number of cases have been settled and fewer than 10 cases still remain to be arbitrated. Of the Letters of Intent issued so far to arbitrating dealers, 29 have been accepted.

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Key dates in the GM, Chrysler dealer appeals


Key dates in GM and Chrysler's efforts to pare down their U.S. dealer network.

-- April 30, 2009: Chrysler LLC files for bankruptcy protection.

-- May 14: Chrysler says it wants to shed 789 of its 3,200 U.S. dealerships by June 9 in a motion filed with the U.S. Bankruptcy Court in New York.

-- May 15: As it heads toward bankruptcy protection, General Motors Corp. tells 1,100 of its 6,150 U.S. dealers that it won't renew their franchises in fall of 2010.

-- June 1: GM enters bankruptcy protection.

-- June 9: Chrysler Group LLC exits bankruptcy protection.

-- July 10: General Motors Co. exits bankruptcy protection.

-- Dec. 3: GM and Chrysler say they will reconsider dealership closures as part of an effort to stave off federal legislation requiring them to keep dealerships open.

-- Dec. 10: Congress requires a binding arbitration process for the 2,800 GM and Chrysler dealers threatened with closure as part of a $1.1 trillion spending bill.

-- Jan. 26, 2010: Nearly 1,600 GM and Chrysler dealers meet a deadline to appeal their closures, according to the American Arbitration Association, a resolution service selected to conduct the hearings.

-- Late February: The American Arbitration Association begins hearings.

-- March 5: GM says it will reinstate 661 dealers because it doesn't have time to negotiate with all 1,100 of its dealers who applied for arbitration.

-- March 26: Chrysler offers to reinstate 80 dealers.

-- June 14: Original deadline for the hearings to end. The hearings are extended for another month.

-- June 29: GM North American President Mark Reuss says GM will end the arbitration process with around 4,500 U.S. dealers.

-- July 14: Arbitration hearings are scheduled to end.

-- July 23: Due date for final decisions.

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Arbitration Summary: All Hearings and Arbitrator Decisions Completed for Chrysler Group LLC

* Company prevails in more than 70 percent of arbitrator decisions, meeting statutory requirement to provide prevailing dealers with Letter of Intent
* Arbitrator decisions reflect understanding that Genesis Project and dealer network decisions essential to Company's future success



Auburn Hills, Mich. , Jul 26, 2010 -

Chrysler Group LLC is pleased that hearings in the dealer arbitration process have concluded and is looking forward to completing its dealer network plans. The decisions to select dealers for the Company's optimized dealer network were carefully considered as part of Chrysler's Genesis Project. The decisions of a great majority of the arbitrators reflect the belief that the Company's dealer network decisions were not only appropriate, but essential to its future success. What is needed are more profitable, better performing dealers to provide better customer service. Indeed, plans to place all of our brands under one roof in well-located facilities has already resulted in enhanced dealer profitability and greater investment by existing dealerships on track with the $500 million investment plan Chrysler announced on November 4, 2009.

Chrysler prevailed in 76 of 108 arbitration decisions. Abour 3 percent of the 789 dealers rejected during the bankruptcy process prevailed in arbitrations.

About the process: The actions to optimize Chrysler’s dealer network were part of its viability and central to the interim financing and proposed sale to Fiat. Among the requirements placed on Chrysler Group LLC was to reshape its dealer network to better meet the requirements of the market. As such, on June 9, 2009, Federal Bankruptcy Court Judge Arthur Gonzalez approved Chrysler’s motion to “reject” the contracts of 789 dealers. In its approval, the Court concluded the Company used sound business judgment, and affirmed the rationale used by the Company to determine which dealers were affected. On December 16, 2009, the U.S. Congress passed H.R. 3288 enabling the 789 affected dealers to pursue binding arbitration in order to secure an opportunity to join Chrysler's dealer network. The bill stipulated that dealers who prevailed in binding arbitration would receive a customary and usual Letter of Intent to enter into a sales and service agreement with Chrysler Group LLC provided they meet financial and operational prerequisites. The arbitration process began in May, 2010 and concluded on July 23, 2010.

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Chrysler Group LLC Confirms Company-released Final Results of the Dealer Arbitration Process

* Confirms that it prevailed in more than 70 percent of arbitrator decisions (76 of 108 decisions)
* Clarifies misreporting of arbitration results
* Reiterates that arbitrator decisions reflect understanding that Genesis Project and dealer network decisions essential to Company's future success



Auburn Hills, Mich. , Aug 2, 2010 -

Clarification: On July 26, 2010, Chrysler Group LLC reported final results of the dealer arbitration process. In that report (which appears below), the Company noted that it prevailed in 76 of 108 arbitration decisions. On July 27, the trade publication Automotive News -- citing the Company as its source -- misreported these results. ("Arbitrators sided with the company 73 times and with dealerships 32 times, Chrysler said today.”) This was incorrect and unethical. Unfortunately, this attribution was never corrected and created confusion among other media outlets. Chrysler Group LLC confirms the final arbitration results posted to this web site on July 26.

For the record, Chrysler Group LLC notes further that it prevailed in seven of the remaining eight arbitration decisions that were rendered in the span of time between publication of the SIGTARP report on July 19 and the conclusion of the arbitration process for the Company on July 26.

Original media release: Chrysler Group LLC is pleased that hearings in the dealer arbitration process have concluded and is looking forward to completing its dealer network plans. The decisions to select dealers for the Company's optimized dealer network were carefully considered as part of Chrysler's Genesis Project. The decisions of a great majority of the arbitrators reflect the belief that the Company's dealer network decisions were not only appropriate, but essential to its future success. What is needed are more profitable, better performing dealers to provide better customer service. Indeed, plans to place all of our brands under one roof in well-located facilities has already resulted in enhanced dealer profitability and greater investment by existing dealerships on track with the $500 million investment plan Chrysler announced on November 4, 2009.

Chrysler prevailed in 76 of 108 arbitration decisions. Abour 4 percent of the 789 dealers rejected during the bankruptcy process prevailed in arbitrations.

About the process: The actions to optimize Chrysler’s dealer network were part of its viability and central to the interim financing and proposed sale to Fiat. Among the requirements placed on Chrysler Group LLC was to reshape its dealer network to better meet the requirements of the market. As such, on June 9, 2009, Federal Bankruptcy Court Judge Arthur Gonzalez approved Chrysler’s motion to “reject” the contracts of 789 dealers. In its approval, the Court concluded the Company used sound business judgment, and affirmed the rationale used by the Company to determine which dealers were affected. On December 16, 2009, the U.S. Congress passed H.R. 3288 enabling the 789 affected dealers to pursue binding arbitration in order to secure an opportunity to join Chrysler's dealer network. The bill stipulated that dealers who prevailed in binding arbitration would receive a customary and usual Letter of Intent to enter into a sales and service agreement with Chrysler Group LLC provided they meet financial and operational prerequisites. The arbitration process began in May, 2010 and concluded on July 26, 2010.