UAW, Fiat likely to hold key stakes in new Chrysler

The UAW and Italy's Fiat S.p.A. could be Chrysler LLC's leading shareholders if the struggling U.S. automaker wins the concessions requested by President Barack Obama's automotive task force by April 30, a source close to negotiations told Automotive News today.

Stakes held by Chrysler's existing shareholders--majority owner Cerberus Capital Management LP and 20 percent minority owner Daimler AG--would be "zeroed" as part of the financial restructuring, the source said.

The U.S. Treasury Department is discussing with Chrysler lenders a potential swap of part of their debts into equity.

A committee representing the big banks and financial institutions holding Chrysler's $6.9 billion in secured debt rejected Treasury's initial offer to exchange their debt for $1 billion. The committee is preparing a counteroffer that will be presented within a few days, according to a source familiar with the lenders committee strategy.

Dividing the pie

The UAW could receive a significant stake in the bailed-out Chrysler -- even larger than Fiat's initial 20 percent, the source said. This stake would come if the UAW accepts equity from converting half of the $10.6 billion that Chrysler owes the union for retiree health care obligations.

Fiat's stake would start at 20 percent and be allowed to increase in blocks of 5 percentage points to 35 percent as the Italian automaker reaches benchmarks in bringing technology to its potential U.S. partner.

A trust controlled by the Obama auto task force would retain a third, significant stake in the bailed-out Chrysler. This stake also would include the 15 percent set aside for Fiat to reach the planned 35 percent control.

If a Fiat-Chrysler alliance goes ahead, the plan is to elect a seven-member Chrysler board that would include representatives from Fiat, the UAW and possibly the automotive task force.

Dividing time between Fiat and Chrysler?

Fiat CEO Sergio Marchionne confirmed this week he could become Chrysler CEO.

"Fundamentally, that's possible, but the title isn't important,"

A person familiar with the negotiations said the new management structure would divide the roles of CEO and chairman. The job of Chrysler chairman would be held by an American, the source said.

Since 2007, Chrysler's chairman and CEO jobs have been held by Bob Nardelli, who was appointed by Cerberus. In December, Cerberus said it was willing to relinquish its holding as part of a Chrysler bailout.

In August 2007, Cerberus bought 80.1 percent of Chrysler from Daimler for $7.4 billion. Daimler owns the remaining 19.9 percent and has written down the value of its stake to zero.

Bradford Wernle contributed to this report.

By Luca Ciferri- Automotive News