The Chrysler assets sale to Fiat Group SpA was consummated today. The deal saves Chrysler from liquidation in bankruptcy and turned Chrysler management over to Fiat CEO Sergio Marchionne....who was immediately named the new CEO. The Italian automaker did not put any money into the deal but will give Chrysler small car and engine technology.
The deal clears the way for a new Chrysler Group LLC to emerge from bankruptcy. The bankruptcy cleared away billions in debt, thousands of employees, 789 dealerships and high labor costs. The United Automobile Union gets stock in the new Chrysler but did not have to give up much in terms of wage concessions.
Apparently, the Indiana pension appeals were not enough to get the Supreme Court involved in the legalities of the issue. The debate centered around the fact that secured bond holders were put in an unsecured position receiving a small percentage of what they thought they should receive.
Some of the factories that had been closed will be reopened shortly! Others will remain closed and liquidated thru the bankruptcy.
The new Chrysler will will focus on small vehicles. "Work is already under way on developing new environmentally friendly, fuel-efficient, high-quality vehicles that we intend to become Chrysler's hallmark going forward," a press release from the company indicated.
Jim Press, will take the position of Vice Chairman and President. Press was formerly Toyota's top U.S. executive but was enticed to join Chrysler in 2007 when Cerberus Capital Management purchased Chrysler.
SUMMARY:
My take on this deal is that it stinks! The Obama administration basically ignored the rule of law where secured creditors are secured by assets....the Chrysler bond holders were robbed and had no recourse. First the liabilities were stripped, which are owned by U.S. companies and citizens, then the assets are given to a foreign corporation Fiat with government financing. This is the sweetheart deal of the century. Fiat did not have to pay $.01 US cent!
Fiat does not have the cash or credit lines to acquire any other large company. If the economy turns worse than expected Chrysler could be in this sad state again! Fiat would be able to walk without much difficulty.
I was very unhappy about the way that they treated the 789 dealers that were closed. It is grossly unfair to the dealers, employees and customers.
Shown above is a concept electric car the Chrysler 200 CC!
