More Chrysler Bankruptcy Information

So the docket is beginning to fill up: Chrysler Bankruptcy Information

As of 12/31/2008, the "Chrysler Companies" (as defined as debtors and non-debtors direct and indirect subsidiaries) listed $39.3B of assets and $55.2B of liabilities. Revenue in 2008 looks to be $48.4B.

From the joint administration filing: Under a liquidation "Chrysler's first lien secured creditors will receive net present value recoveries of less than 38 cents on the dollar and possibly as little as 9 cents; the U.S. government, another secured creditor, will receive less than that; and Chrysler's unsecured creditors will receive nothing."

And the real juice: Chrysler Bankruptcy Affidavit

My takeaways:

• Filed by the CFO, Ronald Kolka.
• Goes on to talk about how imperative it is to avoid a liquidation.
• Asking the Court to approve a 363 sale, financially backed by the U.S. Gov't. 
• 30% of first lien debt holders are against the sale. The affidavit goes on to say that Chrysler bank debt trades at 15 cents on the dollar. That is definitely not the market that a certain dealer that starts with Goldman and ends in Sachs is making right this very moment.
• Goes on to talk about the things I talked about in my last post: Chrysler Bankruptcy
• Upon consummation of the 363 sale, the major assets of old Chrysler would be 8 manufacturing facilities, and related machinery and equipment with a book value of $2.3B. The U.S. Gov't would provide $200M through the DIP loan to run a wind-down and sale of the estate.
• Description of Business: No need to rehash what everyone knows.
• Organizational and Capital Structure: Outstanding amount under the First Lien is $6.9B (as of petition date). Secured by first lien in all Chrysler's assets, a 65% equity pledge of foreign subs, and other guarantees. $2B second lien delayed draw term loan. $4B TARP loan, third lien to first lien's security. $5.3B of trade debt.
• Events Leading to the Petition: Again, everyone knows this. Blame Cerberus.
• More talk on the FIAT alliance
• And lots of first day motions, fairly typical in nature.

Here is Balance Sheet:

We can try to put some kind of recovery on each of these assets, and compare to the $6.9B of First Lien Bank debt (and some trade, estimated at $800M, will have critical vendor status / 20 day rule [503b9 claims], as well as bankruptcy administration fees).  

Assuming bankruptcy fees of $1B and $800M of "20-day claims" are ahead of you, at 25-30 cents on the dollar, the bank debt is implying $3.5B-$3.8B of value. Versus $39B of listed assets, with $1.9B of that cash.  Doesn't seem that too far of a stretch - unless the DIP gets super priority, and primes the shit out everyone. Maybe those crazy hedge fund pirates holdouts had the right idea. 

There are some other interesting affidavits from the head of manufacturing, head of procurement, head of dealers, etc. These are filed under Dockets Item Numbers: 48-54. They are interesting reads. Basically go on to say how imperative this Fiat deal is to everyone in the world. 

More tomorrow on the Chrysler bankruptcy.

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Chrysler Bankruptcy

Chrysler filed for bankruptcy today. For reference, as of now, this is the only docket information I can find (outside of Pacer logins)

Petitions can be found here: Southern District of New York Bankruptcy Court. Here is more information I just found: Chrysler Restructuring Website

As of right now, the Carco bank debt is trading at 25.25-27.25, with Finco (the auto financing arm) first lien trading at 77.25-79.25 and second lien trading at 52-55. Yesterday - at about this time, the Carco was trading at 23-27, with FinCo's first lien trading at 63-65 and the second lien trading at 34.5-37.5. As you can see, the FinCo lenders are loving this (up LOTS on both tranches). Maybe one of the reasons a number of funds did not play ball? Because their exposure to FinCo relative to CarCo?

And here is the White House Statement regarding Chrysler

And my takeaways (from a distressed investor:

• Chrysler will use a 363 sale for its relaunch
• Details of the Chrysler Fiat Alliance - maintain existing factor footprint, Fiat contributing technology and IP (but no capital???). And getting 20% of the stock with earn out rights of 15% more of the equity (5% tranches) for meeting performance metrics.
• UAW accepting concessions but probably won't be enough
• Lenders will receive $2B of cash on a $6.9B claim. That translates to 29 cent recovery. This will be forced on dissenting creditors (do they have the required votes?)
• Daimler waiving its $2B of second lien debt, give up its equity, and settle PBGC claims for $600M
• Cerberus waiting its $2B of second lien claim and forfeit its equity stake.
• VEBA will be established financed with a $4.6B 13 year, 9% note and will receive 55% of the new equity of Chrysler.
• U.S. Treasury receiving 8% of the new equity. Can select 4 independent directors. Canada/Ontario to receive 2% of the new equity.
• U.S will provide a $3.3B DIP as well as provide $4.7B in exit financing to New Chrysler (First Lien Term Loan with varying maturity schedules), and a $288M note which is a fee for making these loans.
• Canada/Ontario participating on a formula/basis
• Chrysler will use GMAC for financing. SO THAT IS HOW CERBERUS IS GETTING SOME LOVING IN THIS DEAL (CERBERUS OWNS ~50% of GMAC). Gmac Bond's have rallied today.
• More lambasting of smart hedge funds.
• Employees getting paid, suppliers getting paid, customer warranties getting paid. U.S. taxpayers - not getting paid.

Edit #1: This is a good read: Stubborn Lenders

Much, much more when the filings start hitting the docket. All I can say...Fiat 1 - U.S. Taxpayers 0. The Chrysler bankruptcy is going to be an interesting one.

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