Chrysler Bankruptcy

Chrysler filed for bankruptcy today. For reference, as of now, this is the only docket information I can find (outside of Pacer logins)

Petitions can be found here: Southern District of New York Bankruptcy Court. Here is more information I just found: Chrysler Restructuring Website

As of right now, the Carco bank debt is trading at 25.25-27.25, with Finco (the auto financing arm) first lien trading at 77.25-79.25 and second lien trading at 52-55. Yesterday - at about this time, the Carco was trading at 23-27, with FinCo's first lien trading at 63-65 and the second lien trading at 34.5-37.5. As you can see, the FinCo lenders are loving this (up LOTS on both tranches). Maybe one of the reasons a number of funds did not play ball? Because their exposure to FinCo relative to CarCo?

And here is the White House Statement regarding Chrysler

And my takeaways (from a distressed investor:

• Chrysler will use a 363 sale for its relaunch
• Details of the Chrysler Fiat Alliance - maintain existing factor footprint, Fiat contributing technology and IP (but no capital???). And getting 20% of the stock with earn out rights of 15% more of the equity (5% tranches) for meeting performance metrics.
• UAW accepting concessions but probably won't be enough
• Lenders will receive $2B of cash on a $6.9B claim. That translates to 29 cent recovery. This will be forced on dissenting creditors (do they have the required votes?)
• Daimler waiving its $2B of second lien debt, give up its equity, and settle PBGC claims for $600M
• Cerberus waiting its $2B of second lien claim and forfeit its equity stake.
• VEBA will be established financed with a $4.6B 13 year, 9% note and will receive 55% of the new equity of Chrysler.
• U.S. Treasury receiving 8% of the new equity. Can select 4 independent directors. Canada/Ontario to receive 2% of the new equity.
• U.S will provide a $3.3B DIP as well as provide $4.7B in exit financing to New Chrysler (First Lien Term Loan with varying maturity schedules), and a $288M note which is a fee for making these loans.
• Canada/Ontario participating on a formula/basis
• Chrysler will use GMAC for financing. SO THAT IS HOW CERBERUS IS GETTING SOME LOVING IN THIS DEAL (CERBERUS OWNS ~50% of GMAC). Gmac Bond's have rallied today.
• More lambasting of smart hedge funds.
• Employees getting paid, suppliers getting paid, customer warranties getting paid. U.S. taxpayers - not getting paid.

Edit #1: This is a good read: Stubborn Lenders

Much, much more when the filings start hitting the docket. All I can say...Fiat 1 - U.S. Taxpayers 0. The Chrysler bankruptcy is going to be an interesting one.