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Chrysler completes sale to Fiat
By Poornima Gupta |
June 11, 2009, Thursday
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Print Edition
Print Edition
CHRYSLER LLC completed the sale of its strongest assets to a group led by Fiat SpA yesterday, reviving the 84-year-old auto maker that was down to its last dollars and facing liquidation late last year.
The asset sale completes an Obama administration-directed fast-track reorganization for Chrysler. Other parts of the auto maker will remain in bankruptcy to be sold or closed.
The new company, known as Chrysler Group LLC, will begin operations immediately, it said in a statement.
Fiat Chief Executive Sergio Marchionne will also become CEO of Chrysler. The auto maker's former CEO, Bob Nardelli, has previously said he would leave the company once the sale is completed.
With the move, Fiat aims to survive and grow out of one of the worst crises in the global auto industry. The Italian auto maker had started looking for partners to gain scale late last year, when auto sales began dropping dramatically.
Chrysler said it issued an equity interest in the new company of 20 percent on a fully diluted basis to a subsidiary of Fiat.
Fiat's equity interest can increase to up to 35 percent if certain milestones mandated by the agreement are achieved, but it cannot obtain a majority stake in Chrysler until taxpayer funds are repaid.
Also, a United Auto Workers union's retiree medical benefits trust fund, called Voluntary Employees' Beneficiary Association, now has a 55 percent equity interest in Chrysler Group.
The United States Treasury's equity interest is 8 percent, and the Canadian government's is 2 percent.
The asset sale completes an Obama administration-directed fast-track reorganization for Chrysler. Other parts of the auto maker will remain in bankruptcy to be sold or closed.
The new company, known as Chrysler Group LLC, will begin operations immediately, it said in a statement.
Fiat Chief Executive Sergio Marchionne will also become CEO of Chrysler. The auto maker's former CEO, Bob Nardelli, has previously said he would leave the company once the sale is completed.
With the move, Fiat aims to survive and grow out of one of the worst crises in the global auto industry. The Italian auto maker had started looking for partners to gain scale late last year, when auto sales began dropping dramatically.
Chrysler said it issued an equity interest in the new company of 20 percent on a fully diluted basis to a subsidiary of Fiat.
Fiat's equity interest can increase to up to 35 percent if certain milestones mandated by the agreement are achieved, but it cannot obtain a majority stake in Chrysler until taxpayer funds are repaid.
Also, a United Auto Workers union's retiree medical benefits trust fund, called Voluntary Employees' Beneficiary Association, now has a 55 percent equity interest in Chrysler Group.
The United States Treasury's equity interest is 8 percent, and the Canadian government's is 2 percent.
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