Chrysler's Jeep brand has previewed its next-generation Grand Cherokee Limited this month. The key new model will begin to arrive in the North American showrooms next year.

Chrysler LLC's creditors have reportedly made a second offer to swap their secured debt according to sources close to the negotiations, this time saying they will reduce the US$6.9 billion owed to them down to US$3.75 billion, although still with the condition of receiving a 40 percent equity stake. The consortium of creditors has also dropped demands for US$1 billion in preferential stock and a further demand that Fiat pump in US$1 billion in cash.

Around 50 creditor banks and hedge funds that are owed US$6.9 billion by Chrysler LLC make up a syndicate of investors that is led by JP Morgan Chase. Other key players in the consortium include Citigroup, Goldman Sachs and Morgan Stanley. At the end of last month the Obama Administration demanded that they reduced this to US$1.5 billion in exchange for a 5 percent stake in the company.

Early last week - after intensive negotiations that are expected to run right up to the April 30 deadline for Chrysler to form an alliance with Fiat - the banks came up with their own response: that they were prepared to reduce their debt by US$2.5 billion in exchange for a 40 percent stake as well as demanding that they receive a seat on the Chrysler LLC board and that Fiat inject US$1 billion of cash into the restructured company. Chrysler is currently 80.1 percent owned by New York-based private equity firm Cerberus Capital Management with former owners Daimler AG holding the balance. That offer was quickly dismissed out of hand by government representatives.

This latest offer, made on Friday, still leaves the two sides around US$2.75 billion in valuation apart and with the U.S. Treasury Department still offering a 5 percent equity stake while the banks are holding out for 40 percent. There was no official response from any side with a Chrysler spokeswoman saying: "we're not commenting on matters related to lenders." Meanwhile Chrysler LLC remains propped up by loans from the U.S. Treasury Department which has just promised a further US$500 million to cover the ailing carmaker's operating costs through April to the end-of-the-month deadline.

Earlier today Larry Summers, President Barak Obama's senior economic adviser who is also jointly in charge of the Auto Task Force, was cautiously optimistic when interviewed on the Fox Sunday News programme. "We're hopeful this is all going to work out in a successful way," he commented as he discussed the upcoming Thursday deadline. "It's something we want to see," Summers added. With the spectre of bankruptcy now looming large as all parties are still quite far apart, Summers told the TV programme that "in certain circumstances, a bankruptcy is not about liquidation. It's about change in legal form that actually protects the company and enables it to function more effectively."