Yesterday, while much of America enjoyed beautiful weekend weather, lawyers for Chrysler, its dealers, the United Auto Workers union, and three Indiana pension funds huddled in federal court, racing toward an as-yet uncertain finish line. Although the dust is far from settled, chances are good that major deliberations in Chrysler's bankruptcy case have concluded and that Judge Arthur J. Gonzalez will issue a ruling in the case today. Here's where things stand:
♦ Most issues surrounding Chrysler and its $6.9 billion debt have been resolved. The 40-odd institutions holding 99% of that debt have agreed to a $2 billion settlement, meaning that they'll receive about 29 cents for every dollar owed.
♦ The holdouts? Those three Indiana pension funds, which own $42.5 million of the debt, or slightly less than 1% of the total. They're pushing for a better settlement, liquidation of the company--anything to give them a better return on their investment.
♦ So far, the court seems unwilling to consider special terms for the pension funds, meaning that they'll probably receive the same 29 cents on the dollar that Citicorp, Morgan Stanley, and other lenders have gotten.
♦ The 789 dealers recently dropped by Chrysler are also angry, and they insist that Fiat should absorb more of them into the newly proposed Chrysler/Fiat network.
♦ Assuming that Gonzales rules in Chrysler's favor on those two grievances, Chrysler's assets will be tossed into a new company, which will then be merged with Fiat.
♦ The UAW will own 55% of the new company, Fiat will own 20% (a stake that could rise to 35% in time), with most other shares held by the U.S. and Canadian governments.
♦ Both the pension funds and the aggrieved dealers can appeal their cases, which could conceivably hold up the Chrysler/Fiat merger--though judges at all levels seem prepared to fast-track the proceedings.
♦ If an agreement isn't reached with Fiat by July 15, the Italian automaker can back out.
So that's where we are now. We'll update you as soon as anything major slides across our desk. Stay tuned!