This is the VOA Special English Economics Report.
race to save two of America's big three carmakers is entering a new and intense
March, the government ordered Chrysler to cut costs and form an alliance with Italian
carmaker Fiat by April thirtieth. The
actions were conditions for additional government aid of up to six billion
dollars. The company received four
billion in federal loans in December.
On Wednesday, Chrysler members of the
United Auto Workers approved cost cutting measures. Under the plan, Chrysler will be able to
change terms of an agreement with the labor union. In return, the U.A.W. would own fifty-five
percent of the company.
The Treasury Department has also been pressing
Chrysler's creditors. The government
wants forty-six creditors to accept two billion dollars instead of the seven
billion dollars the company owes. Four
big banks have agreed. They hold seventy
percent of Chrysler's debt. But other
creditors have refused the terms.
government has also been urging Chrysler to join with Fiat. On Thursday, President Obama announced that
the companies have agreed to become partners.
He said the government will make additional loans to support the partnership. All government loans are to be repaid before
Fiat could take majority ownership of Chrysler in the future.
Mister Obama also said Chrysler will seek bankruptcy
protection in court. Bankruptcy laws
will protect the company from legal action while it continues operations and reorganizes
its finances. The President said the government
will provide about eight billion dollars in additional loans to the company
during this period.
one knows if all this will work. But if
the plan succeeds, it could serve as a model for America's biggest carmaker, General
Motors. G.M. has until June first to
offer a plan to the government if it is to receive new government loans. This week, the company proposed cutting twenty-one
thousand more factory jobs. It will also
sell fewer kinds of vehicles.
Chrysler, G.M. is attempting to reduce its debt. The carmaker plans to do this by offering
company stock in exchange for twenty-seven billion dollars in G.M. bonds. It also wants to make the government a
majority shareholder in return for part of the emergency loans it has received.
that's the VOA Special English Economics Report, written by Mario Ritter. I'm Steve Ember.