BBC News reports the details of US carmaker Chrysler's bankruptcy protection deal and it's alliance with Fiat. US President Barak Obama siad some Chrysler dealerships will close over time but no jobs will be lost in the short term. The move came after talks had broken down with Chrysler's lenders late on Wednesday, the White House said.
Chrysler will receive a further $8bn (£5.4bn) in government aid, up from the $6bn the Treasury had promised it if it had successfully restructured the business by midnight. The White House described the move as a "surgical short bankruptcy" which should last between 30 and 60 days.
President Obama said the "necessary steps" had been taken to give Chrysler "a new lease of life". He added that he had "every hope" that Chrysler will become "stronger and more competitive".
The filing for bankruptcy protection will lead to the forming of a new corporate entity.
Details of the new Chrysler include:
• Fiat will take a 20% stake, with the possibility of it rising to 35%
• The Treasury will have an 8% stake, a union-run trust fund VEBA will take a 55% stake, and the governments of Canada and Ontario will gain a combined 2% stake
• Current owner Cerberus will forfeit its 80.1% stake
• Daimler will give up its remaining 19.9% stake in Chrysler
• Chrysler bondholders will receive $2bn in cash in exchange for forgiving their $6.9bn debt.
The partnership with Fiat will create the world's sixth largest carmaker.
Italy's Fiat will not have to pay anything for its share, which will give it access to the North American marketplace. It will also have the right to appoint three company directors.
In return, Chrysler will be able to take advantage of Fiat's expertise in making smaller, more fuel-efficient cars in its existing US factories.
No Chrysler plants in the US will close. Full story...
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