Chrysler debt sale postponed. Underwriters to carry debt themselves.

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In a BAD sign for Detroit, the underwriters of the Chrysler/Cerberus deal weren't able to sell the debt to other investors or banks, and are now stuck with it.

Bankers Postpone Chrysler Debt Sale
By SERENA NG and GINA CHON, July 25, 2007

Both Cerberus and Daimler, however, will be helping to lend $2 billion to Chrysler because of weak investor interest in buying its debt, a person familiar with the deal said. The debt underwriters, which include J.P. Morgan, Citigroup, Goldman Sachs, Bear Stearns and Morgan Stanley, will initially lend the auto business $10 billion, but intend to sell some of that to investors at a later date.

This is an unusual occurance. Underwriters aren't usually a big fan of taking on billions of dollars in risk - especially given that this type of debt is the last in line to get paid during a bankruptcy.

Chrysler bond deal changes 'very untraditional'
By Leslie Wines
Jul 25, 2007

The underwriters also will hold some Chrysler debt on their books, an unusual practice. "This is a 'sweetheart deal' for Chrysler," Atkins said. "Usually underwriters sell the debt to investors so they don't have to hold it on their books. But this time they are going to hold onto some of it and try to sell it at a later time. This is a big gamble. This is an underwriter-driven deal, not an investor-driven deal and that is very unusual."

But no one tell the fools in Detroit. They've already started changing signs and planning a big party!

As changing of signage begins, Aug. 1 party is in the works
July 24, 2007
BY TIM HIGGINS
FREE PRESS BUSINESS WRITER

As lawyers from Cerberus Capital Management and DaimlerChrysler AG push to complete their Chrysler deal, officials at the Auburn Hills automaker are beginning to remove "Daimler" from some signs and are making plans for a celebration next week.