The U.S. Treasury raised its offer by $250 million in debt restructuring talks with Chrysler LLC lenders on Wednesday as part of a final push to win over lenders holding out for better terms and avoid bankruptcy, two people person briefed on the closed-door talks said.

The lenders had until 6 p.m. ET to vote on the offer, which was made late Wednesday afternoon, one of the sources said.

The raised offer from U.S. officials would provide $2.25 billion cash. In exchange, lenders would agree to extinguish Chrysler's $6.9 billion in secured debt, according to the person, who spoke on condition of anonymity about the ongoing negotiations.

U.S. officials made the new offer as a last-ditch effort to avoid a bankruptcy filing for the struggling automaker that is rushing to complete a merger with Italy's Fiat SpA.

Fund management companies that own Chrysler LLC's secured debt had been holding out against the automaker's proposed restructuring terms as of Wednesday afternoon.

Oppenheimer Funds, Perella Weinberg Partners and Stairway Capital were unprepared to accept the U.S. Treasury's previous offer of $2 billion in cash, the sources said.

Representatives of the three institutions could not be immediately reached for comment.

Chrysler's main lenders -- JPMorgan Chase & Co, Goldman Sachs Group Inc, Morgan Stanley and Citigroup Inc -- agreed to accept the Treasury's $2 billion offer.

All the banks received U.S. taxpayer money as part of the Troubled Asset Relief Program and had come under pressure from the auto industry's political allies to cooperate in avoiding a bankruptcy for Chrysler.

About 45 financial institutions hold Chrysler's secured debt and failure to win their support would send the automaker into bankruptcy, officials have said.

The three firms holding out for a better deal are part of a steering committee representing Chrysler's lenders.

Elliott Management, the fourth fund management firm on the committee, supported the Treasury's earlier offer, a person with knowledge of their position said.

Some funds argued that Chrysler's secured debt had to be paid out at a higher return than what was offered to the United Auto Workers union for its unsecured healthcare-related claim.

The United Auto Workers union was voting on whether to ratify cost-cutting contract terms that would also halve the remaining cash portion of Chrysler's $10.6-billion obligation to a trust fund for retiree healthcare.

Chrysler has been kept afloat with $4 billion in emergency federal loans since the start of the year.

The Obama administration's autos task force, headed by former investment banker Steve Rattner, has said it is willing to invest another $6 billion in Chrysler if the struggling automaker can complete the Fiat alliance and agreements to cut debt and costs with its creditors and major unions.

(Additional reporting by Jui and John Crawley; Editing by Phil Berlowitz, Leslie Gevirtz and Bernard Orr)

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