Chrysler-Fiat deal set, bankruptcy near

WASHINGTON (AP) - Chrysler LLC and Italian automaker Fiat have reached a deal for Fiat to take an ownership stake in Chrysler, which will enter bankruptcy "almost immediately," senior White House officials said in a conference call with reporters.

President Barack Obama says he supports Chrysler's decision to seek bankruptcy protection and that its looming partnership with Fiat will save one of America's "most storied automakers."

Obama said he believes the bankruptcy filing will put the struggling company back on its feet and that the process for recovery will be relatively fast.

During an appearance at the White House, Obama said that "the necessary steps have been taken" to give the company "a new lease on life."

Obama predicted that General Motors, as well as Chrysler, will "come back" and said he wants to see Chrysler recapture the place it had in society at a time when it was "a pillar of our industrial economy."

Obama said the partnership with Fiat gives Chrysler a chance to "not only survive, but thrive," and that Chrysler will emerge quickly from bankruptcy as a stronger, more viable company.

Shortly after the announcement, Chrysler CEO Robert Nardelli says he'll leave the company after its emergence from bankruptcy.

Nardelli says on the CNBC cable network that the Treasury Department did not ask him to resign. But he felt it would be an appropriate time to leave after bankruptcy.

Chrysler has signed a partnership deal with Fiat. Nardelli says the new company will be run by a nine-person board, with six picked by the government and three by Fiat. The board will pick a new CEO.

Nardelli became Chrysler's CEO when Cerberus Capital Management bought the majority of the automaker in 2007.

In a conference call with reporters before the noon announcement, senior White House officials called the impending bankruptcy "surgical," and stressed that the process is expected to happen quickly.

The deal includes a loan from the U.S. government, which will own part of Chrysler. The company is set to get a new board of directors, some of whom will be named by the government, the senior officials said. Workers have made concessions as part of the deal.

Owners of Chrysler vehicles "will have their warranties honored," the officials said. The automaker will reduce the number of dealers it has but there are "no immediate plans" for any workforce reductions, they said. GMAC will step in to finance new car sales.

The senior officials said that broadly speaking, suppliers and dealers will continued to be paid "in the ordinary course" while Chrysler is under bankruptcy protection. The nation's sixth-largest cluster of auto suppliers is in West Michigan.

The bankruptcy option became front-and-center after the automaker and the U.S. government failed to come to an agreement with a group of Chrysler's creditors.

Chrysler is expected to file for Chapter 11 bankruptcy protection in New York. The senior officials said the government is not interested in being a lender or an equity stakeholder in Chrysler or any automaker for longer than is absolutely necessary.

WOOD TV reporter Tony Tagliavia contributed to this report.