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UAW, Fiat… Obama Now Own Chrysler

From Associated Press:

Fiat closes deal to take bulk of Chrysler’s assets

By Tom Krisher And Kimberly S. Johnson, AP Auto Writers

DETROIT – Italy’s Fiat is the new owner of most of Chrysler’s assets, closing a deal Wednesday that saves the troubled U.S. automaker from liquidation and places a new company in the hands of Fiat’s CEO.

The deal creates a leaner company known as Chrysler Group LLC, which is not in bankruptcy protection and is free of billions in debt, 789 underperforming dealerships and burdensome labor costs that hobbled the old Chrysler LLC.

Fiat CEO Sergio Marchionne immediately was named CEO of the new company, which said in a statement that it would soon reopen Chrysler factories that were idled during the bankruptcy process, costing the automaker $100 million per day.

The new company will focus on smaller vehicles, areas in which Chrysler was weak

The sale to Fiat SpA marks a victory for the Obama administration, which shepherded Chrysler LLC into Chapter 11 protection on April 30 with the hope that the company would emerge in a matter of months with a new partner.

"This morning’s closing represents a proud moment in Chrysler’s storied history," said the Treasury Department in a written statement. "The Chrysler-Fiat Alliance has now exited the bankruptcy process and is poised to emerge as a competitive, viable automaker."

The government will loan the new company $4.7 billion, to be repaid within eight years along with interest and $288 million in fees…

Chrysler’s swift passage through about five weeks of bankruptcy proceedings was helped by the involvement of the Obama administration’s auto task force, which provided billions in financing and helped negotiate a deal with the company’s stakeholders.

Under the agreement brokered in the days leading up to Chrysler’s Chapter 11 filing, Fiat will receive up to a 35 percent stake in the automaker in exchange for sharing the technology Chrysler needs to create smaller, more fuel-efficient vehicles.

The United Auto Workers union will get a 55 percent stake that will be used to fund its retiree health care obligations, while the U.S. and Canadian governments will receive a combined 10 percent stake. Fiat would get 20 percent, with the possibility of up to 35 percent

The title of this article does not accurate reflect the facts on the ground. Fiat does not have as big a share of Chrysler as does the UAW. And of course the US government has its share.

And speaking of misrepresentation:

Italy’s Fiat is the new owner of most of Chrysler’s assets, closing a deal Wednesday that saves the troubled U.S. automaker from liquidation and places a new company in the hands of Fiat’s CEO.

As we have noted, the Detroit Free Press reported that 1) Chrysler did not want to merge with Fiat. They wanted to merge with General Motors.

And 2) if Chrysler had been allowed to go into Chapter 11 on its own, it would not have had to be liquidated.

So, thanks to the Obama administration, we now have lost an American car company to Italy.

How is that for stimulating the economy? How is that for out-sourcing?

The deal creates a leaner company known as Chrysler Group LLC, which is not in bankruptcy protection and is free of billions in debt, 789 underperforming dealerships and burdensome labor costs that hobbled the old Chrysler LLC.

This simply is not true, as this very article goes on to demonstrate:

The United Auto Workers union will get a 55 percent stake that will be used to fund its retiree health care obligations, while the U.S. and Canadian governments will receive a combined 10 percent stake. Fiat would get 20 percent, with the possibility of up to 35 percent.

Moreover, Chrysler, or rather Fiat, will still have the UAW wrapped around its neck, if it tries to make any cars in North America.

But when has the AP ever cared about such details?

This article was posted by Steve on Wednesday, June 10th, 2009. Comments are currently closed.

7 Responses to “UAW, Fiat… Obama Now Own Chrysler”

  1. MinnesotaRush says:

    Terrible news S&L’rs …

    “High court clears way for Chrysler’s sale to Fiat”
    By BREE FOWLER, AP

    Justice Ginsburg (et al ?) has caved in.

    Here’s how the power brokers weighed in:

    “Chrysler, Fiat and the Obama administration warned that the high court’s intervention could scuttle the sale, which faced a June 15 deadline after which Fiat could exit the arrangement.”

    Interesting to note that it was also reported that:

    “Early Tuesday, the pension plans seized on comments from Fiat officials that they would not walk away from the deal even if June 15 were to pass without completing the sale.”

    Bottomline is the o-blah-blah regime wanted this to happen and the Court caved. The initial stay was apparently “political” .. a fake and insincere gesture.

    “Late Tuesday, the Supreme Court turned down the opponents’ last-ditch bid. The court issued a brief, unsigned opinion explaining its action. To obtain a delay, or stay, someone must show that at least four of the nine justices find that the issue raised is serious enough to warrant hearing a full appeal and that a majority of the court will conclude the lower court decision was wrong.
    “The applicants have not carried that burden,” the court said.
    The court did not consider the merits of the opponents’ arguments, only whether to hear their full-blown appeal.”

    I side squarely with Mr Moudock:

    “The court did not consider the merits of the opponents’ arguments, only whether to hear their full-blown appeal.
    Indiana Treasurer Richard Mourdock expressed disappointment with the decision and said options seem limited for opponents of the sale.
    “Obviously the supreme court of the land is the supreme court of the land,” Mourdock said. “The United States government has, I continue to believe, acted egregiously by taking away the traditional rights held by secured creditors.”

    The “Rule of Law” seems to be at least, in intensive care, if not dead. And the senior most guardians of that “Rule of Law” have succumbed to political pressure(s).

    God Bless our Republic and its’ true citizens.

    • tranquil.night says:

      This was disheartening indeed, but not surprising. Notice SCOTUS left themselves open on the legal issues of the topic, as Obama’s chaos effect was apparently just too quick in being able to make this the case on which they could challenge policy. That could be a good or bad thing depending on the timing, further explaining the need to get Judge Stumbles up on the high bench.

    • jobeth says:

      Congress…in the tank for Obalmy or impotent. Now the Supreme Court has shed all pretense of “blind justice”.

      Remember everyone, bow and walk backwards out of the king’s presence.

      There’s no one to stop this mad man.

      The Libs can’t see what they are giving away and many of the ordinary Republican voters are so wrapped up in their own little lives all they can manage is a “tisk, tisk” and back to their own little worlds…completely oblivious to what is happening all around them.
      Try to talk to them about it and they brush you off…more important things to do…..

      I’m getting more and more depressed over this stuff…Time to find some sand to stick my head into…. Well, it seems to work for the rest of them! If only I could do that….

  2. Right of the People says:

    After reading this article I went out to the Fiat website. All they build are go-karts with bodies. I can’t see the average American even squeezing into one of these golf carts with their mighty 75 HP engines. Guess Dodges won’t be Ram Tough anymore. One the other hand, you could put one of these crackerboxes in the bed of a Ram pickup for a spare. Hmmmmm, maybe that’s their new marketing strategy.

    • JohnMG says:

      Change the logo to a Sheep–it’s more fitting. Think of the new slogan. Sheep Meek!

  3. take_no_prisoners says:

    Geez Tony, I see more of you than I do my wife. But I can’t afford to dump this POS Fiat yet so “Fix It Again Tony”!!!

  4. What I dont get…

    If you buy a house, and have a mortgage on it, a second mortgage gets sloppy seconds in the event of of a default.. It is Subordinate to the first.

    In this case, the government had no right to loan the bail out money to the company under the terms it has assumed, unless the bondholder (primary beneficiaries) groups agreed. Did they? Somehow I doubt it.

    So what is going to happen.. mark my words… There will be a court battle and the government will have to pay the bondholders the presumed amount in cash, all the while holding on the the company which is going to fail further no matter the Fiat agreement.

    Tax payers get a double whammy.


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