The Treasury Department has increased its offer to repay Chrysler’s senior lenders as part of continuing talks on how to reduce the company’s debt, a person who had been briefed on the talks said on Wednesday.
The government’s new plan, however, still shows a broad chasm between the two sides as Chrysler races to complete a reorganization plan by April 30 or face a near-certain liquidation through bankruptcy.
Under the terms of the new plan, presented Wednesday afternoon, Chrysler’s lenders, who hold about $6.9 billion worth of debt, would receive about 22 cents on the dollar, or about $1.5 billion. They would also receive a 5 percent equity stake in the reorganized company, this person said, who spoke only on the condition of anonymity because the talks are private.
That is an increase from the government’s original proposal, presented on April 12, under which the lenders would have received just 15 cents on the dollar, or about $1 billion. That is roughly equivalent to where Chrysler’s debt is trading on the public markets today.
But in a plan presented to the government on Monday, the steering committee of Chrysler’s lenders sought at least 65 cents on the dollar, or about $4.5 billion, and a roughly 40 percent equity stake in a restructured Chrysler.