Obama: Chrysler, GM can be stronger than ever

Wednesday, April 29, 2009 at 9:13 PM Posted by Beijing News




President Barack Obama has said both Chrysler -- which is hours away from a do-or-die restructuring deadline -- and General Motors can survive the US auto industry's crisis and then thrive.

After earlier casting doubt on Chrysler's viability ahead of Thursday's deadline, Obama said Wednesday prospects for the number three US carmaker appeared rosier as creditors agree to concessions and Fiat works on a tie-up.

"I am actually very hopeful, more hopeful than I was 30 days ago, that we can see a resolution that maintains a viable Chrysler auto company," he said, vowing to end the US government's auto bailouts as soon as possible.

The details of a marriage between Chrysler and Italy's Fiat "have not yet been finalized, so I don't want to jump the gun," Obama added at a White House news conference to mark his first 100 days in office.

"But I am feeling more optimistic than I was about the possibilities of that getting done," he said.

Under a preliminary deal signed in January, Fiat would initially take a 20 percent stake which would then rise to 35 percent and could eventually reach 51 percent.

Fiat would pay nothing, but would provide access for Chrysler to its technology, notably for smaller, more economical vehicles.

If all else fails, Obama said, Chrysler had made "prudent" preparations to go into bankruptcy restructuring.

"It's not clear that they'll have to use it," he said, but any Chapter 11 reorganization for Chrysler would be rapid.

"The fact that the major debt holders appear ready to make concessions means that even if they ended up having to go through some sort of bankruptcy, it would be a quick type of bankruptcy and they could continue operating on a merger on the other side in a much stronger position."

Meanwhile, Chrysler workers were to vote late Wednesday night on a deal between company management and the United Auto Workers leadership as part of the government-mandated shake-up.

GM, the biggest US automaker, has a bit more breathing room with its federal deadline for a new restructuring plan not due until June 1. It has already announced painful cuts.

"I've always said that GM has a lot of good product there, and if they can get through these difficult times, and engage in some of the very difficult choices that they've already made, that they can emerge a strong, competitive, viable company," Obama said.

The Obama administration had praised a deal reached with four of Chrysler's main creditors to swap 5.9 billion dollars in debt for two billion dollars.

However, a number of issues remained unresolved as Thursday's 11:59 pm 0359 GMT Friday deadline loomed.

The Wall Street Journal reported that the deal could not go through unless all of Chrysler's 46 creditors agreed to the debt agreement, and that it was "highly unlikely that all of the creditors will approve the pact."

A detailed bankruptcy plan has been prepared in which Chrysler's chief executive officer would be replaced by the Fiat management, the Washington Post reported.

But "as soon as their situations are stabilized and the economy is less fragile," the government's goal was "to get out, find some private buyers."





Rietschel

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