NEW YORK -- A person familiar with the matter says the Treasury Department has made a new offer to Chrysler's creditors, according to The Associated Press.

The Treasury is asking banks and hedge funds that hold $6.9 billion in debt to forgive $5.4 billion in exchange for a 5 percent stake in a Chrysler-Fiat alliance.

The person says the latest terms were made to the group late Tuesday. The person asked not to be named because the negotiations are private.