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View Poll Results: What will happen with the Chrysler/Fiat Merger?
Chrysler and Fiat will complete the deal and receive $6 Billion from the Treasury 14 48.28%
Chrysler and Fiat will complete the deal but the Treasury will reject it 2 6.90%
The Chrysler/Fiat deal falls apart and Chrysler faces liquidation 5 17.24%
The Chrysler/Fiat deal falls apart but the Treasury "blinks" - Negotiations continue past 04/30/09 8 27.59%
Voters: 29. You may not vote on this poll

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Old 04-02-2009, 09:35 PM   #1
XDCX
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Default What will happen with the Chrysler/Fiat Merger?

What will happen with the Chrysler/Fiat Merger?


On Monday, March 30th President Obama rocked the Auto Industry when he announced that his Task Force concluded Chrysler's not viable as a stand-alone company.

Chrysler now faces a dire ultimatum from the White House - find a merger partner by the end of April or face liquidation.

To the extent that Chrysler has limited their negotiations to Fiat, that leaves us with this month's DealershipForum.com Opinion Poll

What will happen with the Chrysler/Fiat Merger?

Please take our poll and share your thoughts.
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Old 04-02-2009, 10:05 PM   #2
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Default President Obama's "New Path to Viability" Report

Here's a link to the "Obama Administration New Path to Viability for GM & Chrysler" report - click here

The report provides a brief overview of what the Administration expects from Chrysler and GM over the next 30 and 60 days, respectively.
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Old 04-03-2009, 08:44 AM   #3
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Well… my vote reflects more of what I want to happen vs. what I think will happen. I was so caught off guard from this past Mondays announcement that I really don’t know what to think or better yet… what to anticipate.
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Old 04-03-2009, 09:57 AM   #4
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Well… my vote reflects more of what I want to happen vs. what I think will happen. I was so caught off guard from this past Mondays announcement that I really don’t know what to think or better yet… what to anticipate.
I think it's hard to know what's going to happen because the Government keeps changing the rules.

When you read the "New Path to Viability" report the very first requirement for Chrysler is to convince the bond holders to swap their debt for equity. That alone is a deal-breaker - they've already been down that path and the bond holders have held strong. From a business standpoint the bond holders would be crazy to give up a secured position for equity in a company with a cloudy future.

But then you step back and look at what the Treasury did with GMAC. They had a similar requirement and GMAC failed to reach the target set by the Treasury. At the last minute, the Treasury "blinked" and they changed the rules. Who's to say the same thing won't happen with Chrysler?
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Old 04-03-2009, 11:35 AM   #5
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I know I am being optimistic with my answer, but it would be nice to get something done and have some closure. The real frustrating thing is we are not being told a thing, these is no leadership going on with Chrysler, we were give a pathetic conference call earlier this week, that said NOTHING......We as a dealer group have nothing to stand behind and work together as a team/group, there is no one at Chrysler that we really believe in and support and has the dealers best interest at hand. I thought Press was that guy, but lately I am not impressed. We were not a Chrysler dealer when Iaccoca had to go to Washington and get the money, but I have talked to dealers that were and back then they had a plan, they had direction, and they had something to believe in....we have none of that now. If Fiat is the answer, the powers to be should let us know that and what is going on. I have talked to surrounding dealers and we are just a confused bunch of guys that have our life savings on the front line and have no idea what is going to happen if this whole thing goes down the wrong way.
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Old 04-03-2009, 12:53 PM   #6
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We were not a Chrysler dealer when Iaccoca had to go to Washington and get the money, but I have talked to dealers that were and back then they had a plan, they had direction, and they had something to believe in....we have none of that now.
You've hit the nail right on the head.

Chrysler's faced tough times before, in the 80s when Iacocca was running the show and in the 90s when Lutz was at the controls.

Two things are different this time:

First, as you've stated there's ZERO leadership and communication. Nardelli can no longer be trusted and Press has been reduced to a figurehead.

Second, there's nothing in the product pipeline. In the 80s there was the promise of the K-cars, the minivans, convertibles, etc. In the 90s in was the LH cars, the Grand Cherokee and the new Ram Truck.

Chrysler's current product pipeline is a disaster. The only products on the horizon are the reskinned 300 and Charger and the new Grand Cherokee - and those don't appear until the 2011 Model Year.

After that, there's nothing.

As a Chrysler Dealer your only hope is that something from Fiat shows up about two years from now. But even then, Chrysler won't promise that you'll have the ability to sell it - they won't comment on branding and franchise questions.

Sorry for the rant - I guess you struck a nerve.
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Old 04-03-2009, 03:27 PM   #7
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“Treasury Starts Talks With Chrysler Banks on Debt Cut”

http://www.bloomberg.com/apps/news?p...xL0&refer=home

Maybe the Feds can rob the banks or at least put a gun to their heads.
I hope so, as it's the only way the end this deal breaker stalemate.
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Old 04-03-2009, 04:28 PM   #8
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Liked the line about Chrysler sitting at the end of the table… observing! I believe every bank mentioned/involved has received TARP funds and is now negotiating with the very entity that sings off on those checks. Very interesting to say the least.

Taxpayers save the Banks… but the banks refuse to save the taxpayers??? Who would have thunk it!
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Old 04-03-2009, 07:16 PM   #9
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Quote:
Originally Posted by crowe View Post
“Treasury Starts Talks With Chrysler Banks on Debt Cut”

http://www.bloomberg.com/apps/news?p...xL0&refer=home

Maybe the Feds can rob the banks or at least put a gun to their heads.
I hope so, as it's the only way the end this deal breaker stalemate.
Thanks for the link - that was an interesting article.

I agree that Chrysler's only hope as it relates to the bond holders lies with Treasury exerting some pressure or offering some incentives. Based on what I've read Chrysler's debt is trading for only 20 cents on the dollar, yet it's secured by a first position lien.

Like CL pointed out, most of Chrysler's bond holders are also recipients of Treasury TARP funds. It will be interesting to see if the Treasury plays hardball with these banks....
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Old 04-03-2009, 07:25 PM   #10
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Liked the line about Chrysler sitting at the end of the table… observing!
This really is an amazing time.

You've got President Obama firing the CEO of General Motors and the Treasury negotiating Chrysler's debt all in the same week. What's next?

Can you imagine GM or Chrysler trying to get a vehicle like the Corvette or Viper approved in this environment?
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Old 04-05-2009, 10:20 AM   #11
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Default Interesting story in the Wall Street Journal

There's an interesting story in the Wall Street Journal that covers much of what's been discussed here.

Unlike most of GM's debt, Chrysler's debt is secured by hard assets - it's a first lien position. The article commented: "As a result, Chrysler may be worth more to the lenders in a bankruptcy liquidation than if they agree to restructure the debt, and the government has less leverage to force the banks to make concessions."

The article also commented that Fiat is open to a Chrysler bankruptcy if certain conditions are met.

Here's a link to the Wall Street Journal report: http://online.wsj.com/article/SB1238...Tabs%3Darticle
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Old 04-07-2009, 03:16 PM   #12
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Default Ford bought 10 BLN of their debt back @ 30 cents on the $

Gov Granholm urges banks to cut debt

http://www.detnews.com/article/20090...+Chrysler+debt

Negotiating a secured debt swap for stock borders on the impossible & the Feds say it’s deal-breaker if they don’t. My fear is they let Chrysler belly-up as an example of what happens if they don’t save GM. If anybody has not written their congressman supporting the Chrysler bailout, you better start.

Ford bought 10 BLN of their debt back @ 30 cents on the $, must be nice. Sure would like to see someone (like Uncle Sam) loan Chrysler the dough to do the same, probably could buy it for less than 30 cents.
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Old 04-07-2009, 04:29 PM   #13
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Chrysler Lenders Support $1.5 Billion U.S. Aid to Parts Makers

http://www.bloomberg.com/apps/news?p...d=a3qmEDhpPoVU

Either there is hope or 75 mil is chump change.
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Old 04-07-2009, 05:34 PM   #14
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does chrysler have a contingency plan for US if the fed cuts off the cash? god forbid, if they do go BK, who does the warr. and more importantly, how do they get paid for their work? who owns the '09 product, parts, special tools, & etc..? at+/- 3500 dealers, a 1 m + investment for each dealer equals 3.5 b at a bare minimum we collectively stand to lose. does anyone at chrysler/cerberus care? if they truly did, these issues would already have been addressed. if they go BK how many of you want to continue doing warranty work from that day forward not knowing how or if you'll ever be paid.good luck to all of you and please CYA !!!
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Old 04-07-2009, 11:08 PM   #15
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does chrysler have a contingency plan for US if the fed cuts off the cash? god forbid, if they do go BK, who does the warr. and more importantly, how do they get paid for their work? who owns the '09 product, parts, special tools, & etc..? at+/- 3500 dealers, a 1 m + investment for each dealer equals 3.5 b at a bare minimum we collectively stand to lose. does anyone at chrysler/cerberus care? if they truly did, these issues would already have been addressed. if they go BK how many of you want to continue doing warranty work from that day forward not knowing how or if you'll ever be paid.good luck to all of you and please CYA !!!
You ask some great questions, and I know you're not going to like the answers.

Here's a link to a thread where we covered what an OEM bankruptcy might mean for a dealership - it's not a pleasant thought. Click here

The other wildcard is the talk about "pre-arranged" or "surgical" bankruptcies for the OEMs. It's less clear how these filings may impact the dealers.

To be blunt, the only way GM or Chrysler can "win" in a bankruptcy is at someone else's expense. To the extent the dealers do not have a strong voice in Washington DC, I fear they're among the most vulnerable.
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