The Washington Post reports that the Treasury reached an agreement “in principle” with major Chrysler bondholders last night on the terms of their haircut. Under the deal, $6.9 billion in debt would be paid off with a mere $2 billion in cash once Chrysler completes restructuring. Unlike GM’s debt-swap effort and Chrysler’s UAW VEBA deal, the debt is not being swapped for equity in a reconstituted Chrysler. Which means Chrysler’s lenders would rather walk away with about 28 cents on the dollar than cast their lot in with the New, New Chrysler. The Treasury is still trying to keep Chrysler’s restructuring out of bankruptcy court, but officials emphasize that this deal does not guarantee that Chrysler won’t file. Also, about a third of Chrysler bondholders are still mulling the offer over.
Is there really anyone willing to bet their own money on Chrysler making it out of this thing alive? I’m pretty sure I’d have taken the $0.28 on the dollar and felt pretty damn good about it at this point.
“I’m pretty sure I’d have taken the $0.28 on the dollar”
Especially, if you had paid $0.18 for it.
Correct me if I’m wrong, but my understanding is that most of the Chrysler debt is held by those who originally issued that debt.
That is, people who “paid” $ 1.00 for that debt.
I believe many more GM bondholders paid far less than $ 1.00 for their debt, however.
Correct me if I’m wrong, but my understanding is that most of the Chrysler debt is held by those who originally issued that debt.
Probably true. If I’m not mistaken, the old Chrysler bonds were retired around the time of Daimler’s exit; this seems to be relatively new debt.
These bonds were recently trading in the low-to-mid 60’s price range. At 29 cents, they speculated, and they lost, but they would surely get less in a Good Company/ Bad Company bankruptcy filing.
This is quite a different situation from GM debt, some of which has been around for quite a long time, and has been trading as junk or near-junk for the last couple of years.
So in two days, the administration has stolen two car companies out from under private investors and given them to the UAW.
It’s becoming more like the mafia than the government. You have to buy yourself protection by buying yourself some politicians.
So in two days, the administration has stolen two car companies out from under private investors and given them to the UAW.
Not at all. Had Chrysler just filed Chapter 7 last year (no 11 would have been possible), the bondholders would have made pennies, at best.
Had the government not bailed out Chrysler, the bonds would have not have been trading in a range anywhere close to the 60-cent range in recent weeks. All of that value was created by the taxpayer.
The bondholders are making more from this than they would have otherwise. They don’t deserve any sympathy; they took a risk, and they lost.
So in two days, the administration has stolen two car companies out from under private investors and given them to the UAW.
Well they’re two for three. Number three will come along later this year. It should be obvious that one of the biggest losers in the government’s interventions to save GM and Chrysler is going to be Ford. With the U.S. government essentially owning GM now, and with the UAW essentially owning Chrysler (and the government being beholden to the UAW), there’s no way the feds are going to let those two companies fail. And since the market no longer seems to be big enough to support all three, it’s going to have to be Ford, the one that is still independent of government control, that takes the hit. And when they do, then the government will rush in to “save” Ford too, bringing it under government control as well.
Yes, GregS; that’s what FASCISM does. Government (read: privileged few) have pretty much total control over the money and also take over the companies, not by simply stealing them, but by ‘bailing them out’ with taxpayer monies (which don’t actually belong to them) using debt as an instrument (enslaving / permanently indebting all future American generations for the benefit of the few wealthy / government ‘classes’ of people in control).
Fascism. National Socialism.
.28 sounds not too bad to me, but I don’t really know the ins and outs. What bothers me is that it sounds like they could take the deal, and then get cut again when a BK happens.
And if all this “works,” Chrysler will be building and selling which cars, again? Oh, minivans. And Pickups. And eventually, Fiats.
Right.
Menno, hit the textbooks.
You don’t know what fascism means. What you’re describing is plutocracy, as practiced here for the past eight years.
Fascism is not about the distribution of assets; it’s the underlying doctrine on the relationship between citizens and their government. Under true fascism, the success of the State itself (not individual citizens, not even all of them) becomes the focus of everyone’s goals. A textbook example of this is to strip citizens’ rights by passing laws named after “Patriotism” or “Homeland Security.”
By contrast, the actions of the current administration toward the auto industry — whether one agrees with them or not — are avowedly in service of the idea that the nation needs this industry as a job-generating economic engine. This is the diametric opposite of fascist doctrine.
The reason you heard so much about “Islamo-Fascism” the last few years is simplicity itself: Republican public-attitude research detected that the public was beginning to correctly attach the F-word to it, so it appropriated the word to pre-empt its use. With some citizens, this language overhaul was evidently successful.