Chrysler lenders preparing counter offer: sources

By Jui Chakravorty Das and Poornima Gupta

NEW YORK/DETROIT (Reuters) - Chrysler LLC's first-lien lenders are preparing another counter-offer to the U.S. Treasury that involves reducing the automaker's debt, sources familiar with the matter said on Thursday.

The U.S. Treasury on Wednesday offered the lenders $1.5 billion and a 5-percent equity stake in a restructured Chrysler in exchange for about $7 billion of debt they now hold.

The lenders' steering committee is preparing a counter-offer that would include better terms for the lenders, and the offer should be ready "soon," one of the sources said.

The lenders had initially offered to retain about $4.5 billion in debt and take a 40-percent stake in a new Chrysler supported by government investment and a deal with Italian automaker Fiat SpA.

That would have marked a much richer payout for the creditor group than U.S. officials first offered the banks, when they were asked to write off almost $6 billion in debt for no equity that would allow the lenders to benefit from a recovery from the automaker.

The committee representing Chrysler lenders includes the banks that helped finance Chrysler's 2007 sale to private equity firm Cerberus Capital Management: JPMorgan Chase & Co, Morgan Stanley, Citigroup Inc and Goldman Sachs Group.

The committee was broadened earlier this month to also include Oppenheimer Funds, Stairway Capital Management, Elliott Management and Perella Weinberg Partners.