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Fiat promises not to abandon Chrysler deal despite setback
By Colleen Barry |
June 10, 2009, Wednesday
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Print Edition
Print Edition
ITALIAN auto maker Fiat said yesterday it will not turn its back on a deal to acquire a controlling stake in Chrysler despite a United States Supreme Court stay on the sale.
Under terms of the agreement, Fiat has the option to abandon the deal if it is not completed by June 15.
"Fiat won't walk away from Chrysler," Fiat spokesman Gualberto Ranieri said.
The US Supreme Court decision on Monday to hear a challenge by three Indiana pension and construction funds could ultimately scuttle the sale. But the delay could also only be temporary. Justice Ruth Ginsburg could decide on her own to end the stay or ask the full court to decide.
If Fiat were to walk away, Chrysler would have little option but to liquidate.
The trio of funds, which hold a small part of Chrysler's debt, are fighting the sale, claiming it unfairly favors Chrysler's unsecured stakeholders ahead of secured debt-holders such as themselves.
Chrysler claims the agreement with Fiat is the best deal it can get for its assets and is critical to the company's plan to emerge from bankruptcy protection.
Fiat has offered its small car and environmentally friendly engine technology, as well as management expertise, in exchange for an initial 20 percent stake in Chrysler, which will grow to 35 percent in 5 percent increments. Fiat CEO Sergio Marchionne will become Chrysler's chief executive when the deal is complete.
Marchionne, who is responsible for Fiat's turnaround from a loss-making company with a string of failed models, is also expected to bring fundamental changes to the Chrysler management structure.
Under terms of the agreement, Fiat has the option to abandon the deal if it is not completed by June 15.
"Fiat won't walk away from Chrysler," Fiat spokesman Gualberto Ranieri said.
The US Supreme Court decision on Monday to hear a challenge by three Indiana pension and construction funds could ultimately scuttle the sale. But the delay could also only be temporary. Justice Ruth Ginsburg could decide on her own to end the stay or ask the full court to decide.
If Fiat were to walk away, Chrysler would have little option but to liquidate.
The trio of funds, which hold a small part of Chrysler's debt, are fighting the sale, claiming it unfairly favors Chrysler's unsecured stakeholders ahead of secured debt-holders such as themselves.
Chrysler claims the agreement with Fiat is the best deal it can get for its assets and is critical to the company's plan to emerge from bankruptcy protection.
Fiat has offered its small car and environmentally friendly engine technology, as well as management expertise, in exchange for an initial 20 percent stake in Chrysler, which will grow to 35 percent in 5 percent increments. Fiat CEO Sergio Marchionne will become Chrysler's chief executive when the deal is complete.
Marchionne, who is responsible for Fiat's turnaround from a loss-making company with a string of failed models, is also expected to bring fundamental changes to the Chrysler management structure.
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