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Business

Obama expresses doubt over Chrysler deal

Latest update : 2009-04-29

On the eve of the deadline for America's third biggest carmaker to present a viability plan to stay afloat, US President Barack Obama has expressed doubt that a deal can be struck to save Chrysler from bankruptcy.

AFP - US President Barack Obama expressed doubt Wednesday that a deal can be struck to avert bankruptcy for Chrysler, the faltering automaker facing a deadline this week for its viability plan.

"We don't know yet whether the deal is going to get done," Obama said at a town meeting in the heartland state of Missouri.

"One of the key questions now is, are the bondholders, the lenders, the money people, are they willing to make sacrifices as well?" Obama said, noting that workers have already "made enormous sacrifices."

"We don't know yet, and so there's still a series of negotiations that are taking place."

Chrysler faces a Thursday deadline to come up with a viability plan to get continued federal emergency loans, but officials have warned that bankruptcy is still likely.

General Motors - which in recent days announced plans to further slash jobs and production and give the government, bondholders and its workers major stakes in the largest US automaker - faces a June 1 deadline.

Chrysler chief executive officer Bob Nardelli said earlier Wednesday that a preliminary agreement has been reached with the automaker's largest creditors to cancel 6.9 billion dollars in debt in exchange for two billion dollars in cash.

"If approved, it would clear a significant hurdle on our continuing journey toward long-term success, but the proposed agreement still needs to be approved by all of the secured lenders," Nardelli said in a note to employees obtained by AFP.

Chrysler workers will vote Wednesday on a deal reached Sunday with the United Auto Workers union that aims to meet the government's requirement for reducing its debt.

It has also struck a deal with Germany's Daimler AG to renounce its 19.9 stake in the US firm and pay 600 million dollars in pension costs.

The struggling automaker is also expected to report Thursday on the success of partnership talks with Italy's Fiat, which Obama said has "done a good job transforming their industry."

Obama said he hopes an agreement be reached in which "the taxpayers will put in some money to sweeten the deal, but ultimately the goal is we get out of the business of building cars," Obama said.

"One of the potential advantages ... is new technologies where Chrysler starts making fuel efficient, clean energy cars that will meet the needs of future market," he said.

Date created : 2009-04-29

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