What is notable is that during a witness testimony in court today, a Chrysler staffer under oath said that Chrysler had previously been in discussions with Nissan, GM and Fiat for alternative value enhancing programs, which had a Net Present Value of $11 Billion, $36 Billion and 4 Billion, respectively.Instead Chrysler tries to back the Indiana State Treasurer into a corner where he is supposed to realize that he is getting the best possible deal for himself and anyone involved, as, of course, the loaded gun at the temple of the populist apocalypse that would ensue in the case of a liquidation would imply that both Old and New Chrysler are likely worth $0 or less.
Chrysler LLC Statement in Response to Indiana State Treasurer Protesting Chrysler LLC's Chapter 11 Proceeding and SaleSphere: Related Content Print this post
AUBURN HILLS, Mich., May 25/PRNewswire/ -- Indiana State Treasurer Richard Mourdockis protesting Chrysler LLC's Chapter 11 proceeding and sale on behalf of three state pension funds that he oversees.
Chrysler strongly believes Indiana Treasurer Mourdock's position is wrong. Satisfying the Indiana Treasurer's demands would lead to the liquidation of Chrysler, resulting in the loss of more than 4,000 Chrysler jobs and 9,000 retiree pensions in
The combined Chrysler-related investments in the three state pension funds in question totaled approximately
$17 million. The cumulative loss on these investments under the proposed transaction would be approximately $2 million. Chrysler's liquidation analysis shows first lien lenders would get between zero and 18 centson the dollar in liquidation, versus 29 centsin the proposed transaction. However, Chrysler believes this range is unlikely and that there is low probability of a high-side outcome. The company believes it is more likely to be on the very low end, as for the entire time that Chrysler has been in Chapter 11, it has had very few bids for its assets. Thus, under a liquidation scenario, the loss to Chrysler's employees, suppliers and dealers would be far more: in the tens of billions of dollars.
Treasurer Mourdock has expressed that he takes his "oath of office and fiduciary responsibilities very, very seriously." Chrysler believes Treasurer Mourdock is risking significantly further loss, and would be living up to his fiduciary responsibilities by accepting the terms that 98 percent of other creditors accepted. The Treasurer's actions lead one to wonder if his motives are financial or political.
Chrysler is committed to supporting its operations in
Indiana, where more than $150 millionare paid annually to Chrysler employees, $20 millionin state taxes are paid by Chrysler employees, $3 billionof materials are purchased from more than 200 Indiana-based suppliers, and approximately 3,750 people are employed at 75 Chrysler dealerships. Additionally, Chrysler has donated more than $6.5 millionto non-profit and community organizations in Indianastatewide in the past 10 years.
Important facts to note:
-The three funds Treasurer Mourdock oversees are:
- Indiana State Teachers Retirement Fund - This is a reported
$7.8 billionfund. The Chrysler debt is less than 1 percent of the fund ( $32.2 millionor .466 percent of Chrysler first lien debt)
IndianaState Police Pension Trust - This is a reported $250 millionfund. The Chrysler debt is less than 1 percent of the fund. ( $1.3 millionor .019 percent of Chrysler first lien debt)
- Indiana Major Move Construction - This is a reported
$2.5 billionfund. The Chrysler debt is less than 1 percent of the fund ( $8.8 millionor .128 percent of Chrysler first lien debt)
-The combined Chrysler debt to the three funds is
$42.3 million(.6 percent of Chrysler's first lien debt)
-While the three funds have a face value of
$42.3 million, the purchase price was approximately $17 million. We expect they will receive $15 million, for a total investment loss of $2 million.
-Under Chapter 11, Chrysler's first lien creditors were allocated
$2 billion(instead of the $7 billionin original debt). Ninety-eight percent of the first lien creditors have agreed to this allocation.
-The Indiana Treasurer is willing to put Chrysler in liquidation over less than 1 percent of the three funds assets.