Chrysler Down to the Wire in Deal Over $6.9 Billion Debt

Last Updated Apr 29, 2009 10:17 AM EDT

Chrysler confirmed today that with just one day to go before a deadline imposed by the U.S. Treasury Department, it is still short of clearing a couple hurdles in its effort to avoid bankruptcy.

Notably, Chrysler Chairman and CEO Bob Nardelli told employees that some of Chrysler's secured creditors still haven't endorsed a deal to accept $2 billion cash, in exchange for canceling debt with a face value of $6.9 billion.

Chrysler's largest secured creditors have accepted the deal in a preliminary agreement with Treasury, but for the deal to gain final approval, it needs to be accepted by all secured lenders, he said today in a letter to employees.

Nardelli also confirmed that while UAW leadership unanimously approved a tentative new labor agreement, rank-and-file union members still have to vote today whether to ratify the agreement.

"This is another important part of our effort to restructure our costs and attain viability," Nardelli said.

Without those final agreements from creditors and from the union, Chrysler still can't finalize its proposed merger with Fiat.

"We also are continuing partnership talks with Fiat and hope to finalize a definitive agreement that will provide us many strategic advantages and help ensure long-term success," Nardelli said.

Photo: Chrysler