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.

BANKRUPTCY POSSIBLE