Page last updated at 06:22 GMT, Wednesday, 22 April 2009 07:22 UK

Banks 'in bid for Chrysler stake'

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Chrysler has already received a $4bn US government loan.

Lenders that are owed billions of dollars by troubled carmaker Chrysler are prepared to swap this debt for a stake in the company, reports suggest.

The banks and investors, owed $7bn (£4.8bn), have offered to write off about $2.5bn in exchange for more than a third of the company, reports say.

The offer was criticised by a US government official for offering "an unjustified return" to the lenders.

Chrysler needs to find new funds quickly to secure its future.

It has already received $4bn in government aid and has until 30 April to come up with a viable plan for its future if it wants to gain further state funding.

On Tuesday, the US government agreed to a further $500m to see the company through until the end of the month.

It is in partnership talks with Fiat, but the boss of the Italian carmaker has threatened to walk away from an alliance if unions do not make concessions.

Chrysler faces collapse as the economic downturn has led to a dramatic slump in sales of vehicles across the world.

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