Chrysler hedge fund holdouts reject offer - US official

WASHINGTON (Reuters) - A small group of hedge funds rejected a final opportunity to restructure auto maker Chrysler LLC outside of bankruptcy in negotiations with the U.S. Treasury, an Obama administration offical said on Thursday.

U.S. officials had offered Chrysler's secured lenders $2.25 billion in cash in exchange for forgiving their first lien debt, the official said.

"Their failure to act in either their own economic interest or the national interest does not diminish the accomplishments made by Chrysler, Fiat and its stakeholders nor will it impede the new opportunity Chrysler now has to restructure and emerge stronger going forward," the official said.