DETROIT - Chrysler Group LLC reached a deal on Thursday with the shell company holding its old assets to acquire a Sterling Heights, Michigan, assembly plant for $20 million, according to U.S. Bankruptcy Court documents.
The purchase would keep the plant in the Chrysler fold, reversing a controversial decision fought by the automaker's major union that at one time would have closed the plant as soon as the end of this year.
The move would save about 1,200 jobs at the plant, which builds the automaker's Chrysler Sebring and Dodge Avenger midsize sedans, and serves as a major victory for the United Auto Workers union, which owns 55 percent of Chrysler.
Chrysler, which emerged from bankruptcy in June 2009 under the management control of Fiat SpA, had already decided to produce upgraded versions of the Sebring and Avenger at the plant through 2012.
Chrysler CEO Sergio Marchionne said last week that reviving the automaker's midsize sedans was a key part of the planned turnaround of the automaker.
As part of Chrysler's bankruptcy restructuring last year, the plant was placed with Old Carco LLC, the shell company that represents the assets of Chrysler that remain in bankruptcy and were not bought by Fiat.
In its filing with the U.S. Bankruptcy Court for the Southern District of New York, Old Carco said it started negotiating with Chrysler over the plant shortly after the automaker unveiled its five-year business plan in November.
Old Carco received no other written offers and said estimates of potential gross proceeds had ranged from $8.5 million to $21 million, it said in court documents supporting the sale plan.
Chrysler's five-year plan, unveiled by Chief Executive Sergio Marchionne, calls for an all-new mid-size sedan for Chrysler based on Fiat platforms in 2013. The Sebring and Avenger are expected to stay in the market at least until then.
The Sterling Heights City Council approved tax incentives in January to support Chrysler's retention of the plant.
The sale requires court approval and Old Car Co has asked for a hearing on March 11 to approve the deal.
The case is In re Old Carco LLC, U.S. Bankruptcy Court, Southern District of New York, No. 09-5002.
(Reporting by David Bailey and Bernie Woodall; Editing by Anshuman Daga)