Chrysler lenders group releases list of members

/ Source: news services

Attorneys for a dissident group of Chrysler LLC’s lenders have released a list of members that was smaller than expected and represent just a fraction of the automaker’s debt.

Wednesday’s disclosure comes despite allegations of death threats against the group’s members. Bankruptcy Judge Arthur Gonzales ruled Tuesday that the list did not need to be sealed.

The nine members listed hold about $295 million of Chrysler’s $6.9 billion in secured debt.

Previously, lawyers for the group estimated its size at 20 members with about $1 billion in debt. The law firm representing the group, White & Case LLP, says some lenders withdrew from the group for “various reasons.”

Earlier, Chrysler said it is offering up to $6,000 worth of incentives on its 2009 vehicles as it races to emerge from bankruptcy protection and counter a prolonged U.S. sales slump.

The automaker filed for Chapter 11 bankruptcy last week and is working to allay consumer anxieties about buying its cars given uncertainty over its future. Chrysler is trying to complete a sale to Italian automaker Fiat Group SpA and hopes to emerge from bankruptcy in 30 to 60 days. All of its factories have since been idled.

Chrysler said the incentives, which begin on Wednesday, are aimed at reducing the bottom-line price of the car. They include $4,000 cash, $1,000 for current Chrysler vehicle owners, and up to $1,000 for financing through a participating credit union.

The incentives come off prices negotiated with a dealer. They replace employee pricing plus rebates and zero percent financing.

Chrysler's sales are down 46 percent for the first four months of the year. The automaker has been subsisting on $4 billion in government loans since the start of the year. It filed for bankruptcy protection on Thursday after a handful of its creditors refused to accept a government-brokered deal that would have reduced the automaker's secured debt.

On Wednesday, the judge overseeing Chrysler's bankruptcy proceedings ruled the automaker can start taking steps toward selling most of its assets to Fiat. The tie-up would add smaller, more fuel-efficient cars to Chrysler's lineup, give it Fiat technology and open new markets for Chrysler vehicles.

But even if the sale is approved, Fiat vehicles would not go on sale in the U.S. for another 18 months. Until then, the automaker will have to survive on revenue from its existing lineup, which remains heavily skewed toward trucks and sport utility vehicles.

The new incentives are Chrysler's latest push to keep customers coming into its showrooms. Over the weekend, the company launched a new advertising campaign, which included full-page ads in newspapers across the country that proclaimed it is "building a new car company."

Many in the industry have said consumers would be reluctant to buy a car from an automaker in bankruptcy protection because of fears that their warranties would not be honored if the company goes out of business. Jeremy Anwyl, chief executive of the auto Web site, said an incentive program that offers enough of a deal might help allay consumers' concerns about Chrysler's future.

"Consumers are under distress too," he said. "If a car is a really great deal, people are going to put aside the risk."

Meanwhile, President Barack Obama said last week that Chrysler warranties would be backed by the U.S. government.

"Maybe some people have some worries about the longevity of the company," said Jim Press, Chrysler's vice chairman and president, in a conference call with reporters last week. "Well, heck, now the president of the United States, the U.S. government, is not only going to back our warranties, they're going to be an investor in forming our new company.”