Chrysler takes steps to recapitalize
Chrysler Corporation reached preliminary agreement with a group of financial institutions for the biggest recapitalization plan in recent history. It is designed to strengthen Chrysler's balance sheet and help pay $1.2 billion in federal loan guarantees.
The plan, which would require Chrysler to publicly offer new equity securities for the first time since 1978, calls for 150 banks and insurance companies to swap $1.1 billion in preferred stock for regular common stock.
Gerald Greenwald, Chrysler vice-chairman, said at a news briefing Thursday that the deal would eliminate a 10-year after-tax cash burden estimated at $200 million a year.