Amusing PR from Chrysler, in which the company tries to justify the presumably crappy outcome that those pushing for liquidation would get as a result of the "lack of bids" during the less than month long bankruptcy. Maybe Chrysler can also explain how any potential bidders were supposed to complete due diligence in the whopping week or so they had in order to outbid Fiat (FIATY.PK) in its stalking horse bid, which additionally had the blessing of the administration with a whole lot of taxpayer funded debt that will be eliminated subsequent to Good Chrysler's emergence. Maybe instead, Chrysler can provide some more color on the funding proposals that, under cross examination, emerged it had been pursuing. Zero Hedge reported about these, which emerged at the May 5 court hearing, and I quote:
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 Sale
AUBURN HILLS, Mich., May 25 /PRNewswire/ -- Indiana State Treasurer Richard Mourdock is 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 Indiana alone.
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 cents on the dollar in liquidation, versus 29 cents in 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 million are paid annually to Chrysler employees, $20 million in state taxes are paid by Chrysler employees, $3 billion of 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 million to non-profit and community organizations in Indiana statewide 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 billion fund. The Chrysler debt is less than 1 percent of the fund ($32.2 million or .466 percent of Chrysler first lien debt)
- Indiana State Police Pension Trust - This is a reported $250 million fund. The Chrysler debt is less than 1 percent of the fund. ($1.3 million or .019 percent of Chrysler first lien debt)
- Indiana Major Move Construction - This is a reported $2.5 billion fund. The Chrysler debt is less than 1 percent of the fund ($8.8 million or .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 billion in 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.