WASHINGTON -- The Obama administration's auto task force will meet Thursday with Fiat SpA's top executive and representatives of General Motors Corp. bondholders, following a session Tuesday with Gov. Jennifer Granholm as part of an intensifying study of the industry's difficulties.
The meetings come as a March 31 deadline approaches for a decision on granting additional federal aid to GM and Chrysler LLC, and as fears grow about accelerating failures in the auto supply industry -- a topic of Granholm's meeting.
All of the meetings include Steven Rattner, a Wall Street financier, and Ron Bloom, a special assistant to the president of the United Steelworkers union, who are key advisers to the auto task force.
They will meet with advisers representing a substantial number of GM's bondholders, according to a source familiar with the negotiations who said the bondholders will make a case for restructuring GM outside of bankruptcy.
The bondholder negotiations are among the most complicated aspects of the plan GM submitted to the U.S. Treasury Department last month outlining how it would restructure to become a viable company. GM hopes to reduce its debt burden by converting much of it to equity, as called for under the terms of its federal loans. But the question of how much of a loss bondholders should take complicates the issue, as does the fact that not all bondholders will be represented at this week's meeting.
The bondholders' meeting will follow a session with Sergio Marchionne, chief executive of Fiat, Chrysler's prospective alliance partner, to discuss what the Italian automaker would bring to Chrysler if the two companies concluded a deal.
A spokesman for Fiat said the Obama auto team requested that Marchionne come to Washington. "He has been asked to explain the contribution of Fiat to Chrysler in terms of technology and so on," said spokesman Gualberto Ranieri.
Marchionne also will take questions from members of the team, which is helping the White House devise a strategy to restructure the U.S. auto industry in the midst of a terrible downturn.
The U.S. government has loaned Chrysler $4 billion already, and the Auburn Hills automaker is seeking $5 billion more.
As the smallest of Detroit's automakers and the most reliant on its domestic market, Chrysler is widely viewed as needing a partner to ensure its long-term survival. In its recovery proposals to the government, Chrysler has outlined its prospects with and without a partner -- and sees itself faring better with a partner.
Fiat, the automaker with the most fuel-efficient range of models in Europe, has proposed to share small-car platforms and other technology with Chrysler in exchange for a 35 percent stake in the automaker as part of a global alliance.
According to a study released last week, Fiat had the lowest average fleet carbon dioxide emissions of any automaker that sold cars in Europe in 2008.
Chrysler, once part of DaimlerChrysler AG, is 80.1 percent owned by New York-based private equity firm Cerberus Capital Management, which has previously held talks with GM and with the Renault SA-Nissan Motor Co. alliance about a possible deal with Chrysler.
Washington has provided GM with $13.4 billion and has asked both companies to submit reports by the end of the month demonstrating the progress they have achieved in their efforts to become viable manufacturers.
Granholm has pushed for that aid, but said before her meeting with the task force on Tuesday that she also would seek relief for auto suppliers.
A trade group for the companies has sought about $18.5 billion in federal aid, saying a sharp drop in payments from the domestic carmakers has placed many suppliers in danger of collapse. The issue has gotten increasingly intense focus from Michigan politicians.
"If one or two or three of them go under, they could bring down not just the domestic automakers, but the (foreign-owned) transplants here in the U.S. as well," Sen. Carl Levin, D-Detroit, said Tuesday.
But unlike delivering cash to two large companies, aiding the complex web of 400 or more parts-makers is a challenge, Levin said. The trade group has proposed either direct loans to parts firms, or routing payments through the automakers' own accounting systems.
"It's complex, but that doesn't mean it's not doable," Levin said.
Treasury officials were not immediately available for comment.