President Obama will make Chrysler speech Thursday

President Barack Obama will make one of two speeches tomorrow morning, according to the Wall Street Journal. One will announce that Chrysler will file for Chapter 11 bankruptcy protection while it completes its alliance with Fiat SpA; the other will announce the automaker has successfully met the terms imposed by the President’s auto task force.

Bloomberg News reported earlier today that sources said the first speech was the more likely, given the problems dealing with Chrysler’s smaller, secured creditors still holding out for a better deal. In addition, UAW members have yet to ratify the new agreement reached last weekend. That vote is going on today, but results won’t be known until later.

The President, speaking at a town hall meeting near St. Louis, said he hopes a deal can be completed between Chrysler and Fiat.

“We’re hoping we can get a merger where the taxpayers will put in some money to sweeten the deal but ultimately the goal is — we get out the business of building cars and Chrysler goes and starts creating the cars that consumers want.”

However, the President also said there are still some doubts, “We don’t know yet whether the deal is going to get done. I will tell you that the workers at Chrysler have made enormous sacrifices — enormous sacrifices — to try to keep the company going.

“One of the key questions now is, are the bond holders, the lenders, the money people, are they willing to make sacrifices, as well? We don’t know yet, so there’s still a series of negotiations that are taking place.”

Timing could prove interesting as the President’s speech is scheduled for Thursday morning but Fiat Vice Chairman John Elkann said earlier this week that any deal between Fiat and Chrysler would not be announced until the end of the business day on Thursday, hours after the Presidential announcement. This could mean the plan is already in place for Chrysler to go into a short-term Chapter 11, allowing it to trim its debt and dealer ranks, and emerge from bankruptcy allied with Fiat. The Treasury likely would be providing debtor-in-possession financing and the company would be eligible for the $6 billion in government loans it had sought.

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