Posted by WARREN MOSLER on 1st May 2009
by Katherine Burton, Sree Bhaktavatsalam and Pierre Paulden
May 1 (Bloomberg) — Chrysler LLCÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s secured lenders include Yale University,Oaktree Capital Management and assets managed for the University of Kentucky, Halliburton Co., Kraft Foods Master Retirement and the Bill and Melinda Gates Foundation,, according to a court filing in the carmakerÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s bankruptcy.
Chrysler, the nationÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s third-largest carmaker, yesterday filed for Chapter 11 bankruptcy after a group of 20 Chrysler secured lenders calling itself the ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œCommittee of Chrysler Non- Tarp LendersÃƒÂ¢Ã¢â€šÂ¬Ã‚Â rejected an offer by the government that would have paid them $2.25 billion on $6.9 billion of debt, or 33 cents on the dollar. The government plans to ask the bankruptcy judge to let it pay the creditors in that group $2 billion, or 29 cents on the dollar to end their claims.
ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œA group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout,ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â President Barack Obama said yesterday in Washington before ChryslerÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s bankruptcy filing.
The list of more than 100 secured lenders, filed yesterday in the U.S. Bankruptcy Court in Manhattan, includes those that initially declined the government offer as well as others, including the U.S. Treasury.
First the Fed is the one who approved the AIG bonuses, and now the Treasury is trying to claw back some of the funds it’s giving Chrysler.
Some investors, including OppenheimerFunds Inc. and Perella Weinberg Capital Management LPÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s Xerion hedge fund, bought the debt of the automaker before last July. On June 30, Chrysler auto loans were trading at about 49 cents on the dollar. Xerion, run by Daniel Arbess, OppenheimerFunds and Stairway Capital Advisors, were all part of the dissident group. Hedge funds including Elliott Management Corp. and York Capital Management LP, supported the governmentÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s deal.
Perella and Xerion issued a statement yesterday after the presidentÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s comments saying it accepted the government offer and would attempt to persuade other lenders to do the same.
They probably bought it even cheaper.
ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œWe believe that this is in the best interests of all Chrysler stakeholders, and our own investors and partners,ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â the Perella statement said. ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œWe are working with other non-TARP Lenders to encourage broad participation in the settlement.ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â
Goldman Sachs Group Inc. sold off about $500 million of the loans they had underwritten in April 2008 at 63 cents on the dollar, telling clients they would get a yield 25 percent if they held the paper for four years.
Executives at the lenders declined to comment or didnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t return calls seeking a comment.
The Obamanation continues.
Chrysler is not a strategic business, the courts can handle it as needed, and government can sustain full employment in desperately needed services at will with fiscal adjustments.