Treasury Ups Offer to Chrysler Lenders

Treasury blinks in standoff that will determine auto maker's future
By Rob Quinn,  Newser Staff
Posted Apr 23, 2009 1:58 AM CDT
The government's latest proposals offers Chrysler's lenders a stake in the auto maker for the first time, but only 5% instead of the 40% demanded.   (AP Photo/The Canadian Press, Frank Gunn)
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(Newser) – The Treasury Department is offering banks holding Chrysler's debt a better deal in the latest round of the back-and-forth over the automaker's future, the Wall Street Journal reports. The counter offer—still way short of what the banks seek—proposes to give lenders 22% of the $6.9 billion Chrysler owes, plus a 5% stake in company.

The banks—which demanded 40% equity and payment of 65% of the debt after the Treasury earlier offered 15% payment and zero equity—have yet to comment on the new proposal. Chrysler is likely to go into liquidation if a debt deal can't be finalized by the April 30 deadline. Treasury and the lenders, still $3 billion apart, are expected to keep haggling until the last minute.