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U.S. could get shares of GM, Chrysler

Posted Wednesday, Apr 15, 2009, 1:31 pm in Employee News

The federal government could take substantial stakes in General Motors Corp. and Chrysler LLC as a way to protect taxpayer money lent either in or outside bankruptcy, people familiar with the plans said today, the Detroit Free Press reported.

After two weeks of talks, little progress has been made on several issues at both companies, these people told the Free Press. While much of the attention has focused on debt, many other hurdles remain, such as how a Chrysler-Fiat alliance would finance its customers, the paper said.

Creditors of Chrysler LLC have rejected a $1-billion offer for their $6.9 billion in secured debt, and plan to make a counteroffer within the week that could include a mix of cash, debt and equity in a Chrysler-Fiat partnership, the Free Press said. Chrysler’s bondholders would be first in line to have their debts paid should Chrysler be forced into bankruptcy, but want to avoid that if possible, a person familiar with the talks told the Free Press.

It’s unclear how much of a stake the government might take in either firm, or whether it would prefer some other kind of protection for taxpayer money, the story said. In rescuing banks and financial firms, the U.S. Treasury has usually taken preferred shares that carry limited or no voting rights, the paper said. (Detroit Free Press)
 
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