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Nardelli: Chrysler Will Be Sold To Fiat On Friday

May 28, 2009

Chrysler chairman and chief execute Robert Nardelli said in testimony in bankruptcy court this afternoon that he expects Chrysler's proposed sale to Italian car maker Fiat to close on Friday, The Post's Tomoeh Murakami Tse reports from New York.

Nardelli has been testifying in U.S. bankruptcy court since 2:15 p.m. today, saying that the sale to Fiat is the best and only option available to the automaker besides liquidation. This is the second day of the highly-anticipated hearing on a motion by Chrysler to sell itself to an entity jointly owned by Fiat, the United Auto Workers and the U.S. and Canadian governments.

Tom Lauria, an attorney representing Indiana pension and construction funds that are objecting to the sale, asked Nardelli when he expected the transaction to close.

"Tomorrow," he replied.

"You expect the transaction to close tomorrow?" Lauria said.

"That's the plan," Nardelli said, to courtroom laughter.

If the transaction really does close tomorrow -- pending approval by bankruptcy judge Arthur Gonzalez -- the government-orchestrated restructuring of Chrysler would have been completed in 29 days.

Lauria asked Nardelli if the company has all the regulatory approvals necessary to close the deal.

"That's well on its way. Hopefully we'll get it done by tomorrow," Nardelli said.

Lauria then asked Nardelli if he had received any indication as to when the regulatory approvals may come.

Nardelli replied, "Yes. From counsel."

At that point, a lawyer for Chrysler objected to the line of questioning.

The Chrysler lawyer also told Nardelli, "Please don't divulge conversations you've had with counsel related to the transaction."

"Okay," Nardelli said. "Sorry."

LINK:The Ticker - Nardelli: Chrysler Will Be Sold To Fiat On Friday - Economy Watch *
 

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Now June 1st?

Chrysler Judge Delays Ruling on Asset Sale to Fiat


May 29 Chrysler LLC will have to wait until June 1 for a court decision on whether it can sell most of its business to a group led by Italy’s Fiat SpA, a deal intended to fire up the bankrupt automaker’s idled manufacturing plants.

U.S. Bankruptcy Judge Arthur Gonzalez said today at a court hearing in Manhattan that he will issue an opinion on the proposed sale “sometime Monday.”

More than 300 objections were filed to the sale, though most were withdrawn or resolved. Objections from attorneys representing some of the 789 car dealers who had their contracts rejected by Chrysler and from a group of Indiana state pension and construction funds still stood.

The carmaker is seeking approval to sell itself to an entity owned by Fiat, a union benefit trust, the U.S. Treasury and the Canadian government. The Auburn Hills, Michigan-based company would get $2 billion in cash to distribute to secured lenders holding $6.9 billion in loans. Turin-based Fiat can walk away from the sale if it doesn’t close by June 15, with a one- month extensions for antitrust approvals. Chrysler didn’t receive any other bids for its assets, attorneys said.

Creditors have argued that the sale is going too quickly and the government set an artificially urgent schedule. If the sale is approved, Chrysler will work on disposing of the eight manufacturing plants that Fiat isn’t taking. Chrysler’s 22 U.S. factories, with about 26,800 hourly workers, were shut on May 1.

$4.9 Billion Loans

Chrysler is being funded by $4.9 billion in loans from the U.S. and Canada. President Barack Obama’s Auto Task Force took a substantial role in negotiating with Chrysler’s creditors, officials have said.

At today’s hearing, attorneys for pension funds fighting the sale argued that the U.S. Treasury violated the Constitution and the terms of Troubled Assets Relief Program through its involvement with restructuring Chrysler.

TARP funds were intended for financial institutions, not automakers, and a separate auto bailout bill wasn’t approved by the U.S. Senate, said Glenn Kurtz, a lawyer representing the Indiana pension and construction funds that hold secured Chrysler debt.

“Congress made it absolutely clear it wouldn’t allow Treasury to fund an auto bailout,” Kurtz told Gonzalez. “It violates the Constitution and it violates TARP.”

The Fiat offer is supported by most of Chrysler’s secured lenders, who are represented by JPMorgan Chase & Co. and an attorney for the government. Sixty-two percent of those lenders holding 90 percent of the loans supported Chrysler’s plan.

‘No Secret’

Assistant U.S. Attorney Jeanette Vargas said it was “no secret” that TARP money was going to Chrysler and General Motors Corp. and that Congress has oversight of the spending. Treasury Secretary Timothy Geithner has told Congress about the spending and the government has stated car companies are eligible for funding under the Emergency Economic Stabilization Act.

“It certainly wasn’t the government that drove Chrysler into bankruptcy,” Vargas said. “Chrysler came to the government” and, like any lender, the Treasury wanted to see a viable business plan, not exert undue influence over the company, she said.

Corinne Ball, a Chrysler lawyer, said the proposed sale was similar to the sale of almost all the assets of Trans World Airlines Inc. to AMR Corp. in 2001. While the sale to Fiat may not seem palatable to some of the company’s creditors, it was a last resort, said Ball, who compared the offer to a leveraged buyout by Fiat and the United Auto Workers union.

Liquidation Alternative

“There was no and is no other alternative but liquidation,” Ball told Gonzalez. “No one in the market would be doing for us what this LBO is doing.”

The Indiana funds also said Obama’s administration has inverted the priority in which creditors are supposed to be paid under bankruptcy law. Unsecured creditors such as parts suppliers and the UAW are getting a better return than the holders of secured claims, they said.

Thomas Moers Mayer, an attorney representing Chrysler’s unsecured creditors, said the Indiana pension funds represented by Kurtz and Tom Lauria of White & Case LLP were secured, not senior lenders.

“Secured isn’t senior,” Mayer said. “He’s entitled to be paid the value of his collateral” and that value is determined by what someone is willing to pay for it.

Chrysler, in its April 30 court filings, listed assets of $39.3 billion and liabilities of $55.2 billion, making it the fifth-largest bankruptcy in U.S. history, according to data compiled by Bloomberg.

The case is In Re Chrysler LLC, 09-50002, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Article:Chrysler Judge Delays Ruling on Asset Sale to Fiat (Update2) - Bloomberg.com
 
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