WRAPUP 2-Chrysler talks progress, GM draws $2 bln US loan

* Chrysler lenders make new offer to Treasury on debt
* GM draws $2 bln of additional U.S. government aid
* Chrysler, Canadian Auto Workers talks continue
* Ford Q1 loss beats Street forecasts, shares soar

(Recasts with details on additional GM government aid)
By David Bailey and John Crawley
DETROIT/WASHINGTON, April 24 (Reuters) - Chrysler's lenders
and a Canadian union continued talks on Friday with less than a
week to a U.S. government deadline to cut deals, as General
Motors Corp drew $2 billion more in government aid.
GM has been operating under $13.4 billion of emergency
loans from the U.S. government. The draw adds working capital
for the automaker. The U.S. Treasury could lend another $3
billion to GM. [nN24447579]
The administration has not yet extended new money to
Chrysler, which has been operating on $4 billion of emergency
loans, but officials said they were working around the clock to
avert a Chrysler bankruptcy filing and facilitate an alliance
between Chrysler and Italy's Fiat SpA .
The struggles of its two U.S. competitors overshadowed Ford
Motor Co results on Friday. Ford, which has not sought
emergency government loans, posted a $1.4 billion loss that was
less than analysts had expected and said it was on track to at
least break even in 2011.
Ford also said its cash burn rate was substantially lower
in the first quarter than it had been in the two proceeding
quarters and was likely to decrease further as the year
progressed and its shares soared as much as 20 percent.
[nN24400235]
But Chrysler remained the main focus of the North American
auto sector. It faces an April 30 deadline to reach deals that
would cut its debt, labor costs and cement an alliance with
Fiat to satisfy the Obama administration.
Chrysler has been operating under $4 billion of emergency
U.S. government loans and would need to complete those
agreements to maintain its funding and receive more. Without
additional support, Chrysler could liquidate.
A critical part of the Chrysler restructuring is reducing
about $7 billion of first-lien secured debt generated when the
automaker broke away from Daimler AG in 2007.
Daimler retained a nearly 20 percent stake in Chrysler.
Lenders have balked at taking a severe haircut on the
first-lien debt, but they made a new offer to the U.S. Treasury
on Friday, a source briefed on the matter told Reuters.
[nWEN7831]

TALKS INTENSIFY
Talks between Treasury and the lenders have intensified as
the deadline approaches. On Wednesday, the Treasury offered the
lenders $1.5 billion and a 5 percent equity stake in a
restructured Chrysler in exchange for the debt.
The lenders had offered to retain about $4.5 billion in
debt and take a 40 percent stake in a new Chrysler supported by
government investment and the Fiat deal. The new offer cut that
to $3.75 billion and dropped a requirement that Fiat make a $1
billion additional investment in Chrysler. [nN24363253]
Chrysler, about 80 percent controlled by Cerberus Capital
Management [CBS.UL], told its U.S. dealers on Friday that it
was making progress in its restructuring talks with the U.S.
government and had no plans to file for bankruptcy before the
end of month government deadline. [nN24423700]
On Thursday, Canadian Auto Workers President Ken Lewenza
told reporters that the union expected to complete a
cost-savings agreement with Chrysler on Friday.
[nN23359054]
The CAW said it would provide an update on negotiations at
a press conference at 8 p.m.
Canada's Industry Minister Tony Clement said on Friday that
bankruptcy protection would not be the government's preferred
option for Chrysler. [nN24480457]
The immediate deadlines for Chrysler partly eclipsed
General Motors Corp struggle. The Obama administration
rejected a GM restructuring plan, ousted its chief executive
and told the automaker to cut deeper and move faster if it
wanted to continue to receive government support.
On Thursday, GM announced plans to slash production in
North America over the next three months.
GM said on Friday that the trustee for a fund created to
allow GM employees to put savings into company stock had sold
all of its shares. The sales started on March 31, the day after
the Obama administration rejected the automaker's restructuring
plans, and concluded on Friday. [nWEN7849]
GM said the trustee was authorized to sell the shares if it
determined there was a serious question about GM's short-term
viability as a going concern without resorting to bankruptcy or
no possibility in the short term of recouping substantial
proceeds from the sale of stock in bankruptcy proceedings.
In Europe, auto sector consolidation remained the focus.
GM is looking to spin off its German unit Opel and UK's
Vauxhall Motors and is seeking investors. Fiat and Magna
International are possible investors.
Armin Schild, a labor leader who holds a seat on Opel's
supervisory board, rejected the idea of a Fiat bid for Opel,
preferring an investor such as Magna , a Canadian parts
maker.
Fiat sought to play down expectations that it was about to
make an offer for Opel. [nLO260277]
(Reporting by David Lawder John Crawley, Poornima Gupta, John
McCrank, Kevin Krolicki, Jui Chakravorty Das, David Bailey,
Gilles Castonguay and John O'Donnell; Editing by Toni Reinhold)
((david.bailey@thomsonreuters.com; +1 313 967 1910; Reuters
Messaging: david.bailey.reuters.com@reuters.net))
Keywords: AUTOS/

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