UPDATE 1-Three funds hold out in Chrysler debt deal-sources

(Adds details on holdouts, byline)
By Poornima Gupta
DETROIT, April 29 (Reuters) - Three fund management
companies that have Chrysler LLC's secured debt were holding
out against the automaker's proposed restructuring terms as of
Wednesday afternoon, two people briefed on the closed-door
negotiations said.
Oppenheimer Funds, Perella Weinberg Partners and Stairway
Capital were unprepared to accept the U.S. Treasury's offer of
$2 billion in cash to extinguish $6.9 billion in secured debt,
said the sources, who asked to remain anonymous because they
were not authorized to speak to the press.
Representatives of the three institutions could not be
immediately reached for comment.
Chrysler's lenders and U.S. officials were meeting
Wednesday afternoon and expected to continue discussions in a
bid to win wider support for the government's offer, those
briefed on the matter said.
Chrysler's main bank lenders -- JPMorgan Chase & Co
, Goldman Sachs Group Inc , Morgan Stanley
and Citigroup Inc -- have agreed to the Treasury's offer.
All the banks received U.S. taxpayer money as part of the
Troubled Asset Relief Program.
About 45 financial institutions hold Chrysler's secured
debt and failure to win their support would send the automaker
into bankruptcy, officials have said.
The three hold-outs hoping for a better deal are part of a
steering committee representing Chrysler's lenders. The
position of Elliott Management, the fourth fund management
institution on the committee, was unclear.
Some funds argued that Chrysler's secured debt had to be
paid out at a higher return than what was offered to the United
Auto Workers union for its unsecured healthcare-related claim.
The United Auto Workers union was voting on whether to
ratify cost-cutting contract terms that would also halve the
remaining cash portion of Chrysler's $10.6-billion obligation
to a trust fund for retiree healthcare.
Chrysler has been kept afloat with $4 billion in federal
loans since the start of the year and could get another $500
million before its month-end restructuring deadline established
by the autos task force.
The task force, headed by former investment banker Steve
Rattner, has said it is willing to invest another $6 billion in
Chrysler if the struggling automaker can complete the Fiat
alliance and agreements to cut debt and costs with its
creditors and major unions
(Additional reporting by Jui Chakravorty and John Crawley;
Editing by Phil Berlowitz, Leslie Gevirtz)
((poornima.gupta@reuters.com; 313-967-1901; Reuters Messaging:
poornima.gupta.reuters.com@reuters.net))
Keywords: CHRYSLER/LENDERS

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