In Michigan
6:21 pm
Tue April 28, 2009

Government, major Chrysler debtholders reach deal

Washington, DC – Washington, DC (AP)

A person familiar with the talks says the Treasury Department has reached a tentative agreement with four of Chrysler's major debtholders as the automaker races to stave off bankruptcy.

Under the agreement, the four banks will forgo claims to their portion of Chrysler's $6.9 billion debt in exchange for $2 billion in cash when the deal closes.

The person spoke on condition of anonymity because the agreement has not been formally announced.

The person says Treasury needs to persuade all 46 banks and hedge funds that hold Chrysler debt to go along.

If not, a bankruptcy filing could still be possible for the nation's third
largest automaker.