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Fiat rejects idea of assuming debt in its deal with Chrysler
By Colleen Barry |
March 21, 2009, Saturday
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Print Edition
Print Edition
FIAT Group, the Italian auto maker, said yesterday that it won't assume Chrysler LLC debt -- current or future -- in a deal for 35 percent of Chrysler, contradicting earlier statements from Chrysler's chief executive.
The statement said Fiat "intends to make absolutely clear that the proposed alliance will not entail the assumption of any current or future indebtedness to Chrysler."
On Thursday, Chrysler's chief executive said that Fiat would be responsible for 35 percent of Chrysler's debt to the United States government should a proposed alliance go through.
Fiat shares slipped 5.5 percent to 4.45 euros (US$6.08) on the Milan stock exchange early yesterday on the Chrysler statement. Shares recovered after the Fiat statement.
Bob Nardelli, chief executive officer of Chrysler, said in a video posted on the company's Website that the company can be viable on its own, but he said a deal with Fiat would enhance that viability.
Fiat is discussing trading its small-car and small-engine technology for a 35 percent stake in Chrysler in a non-cash deal. The agreement would help Chrysler bring badly needed small cars to its showrooms while helping Fiat re-enter the American market with the Alfa Romeo brand and the update of the iconic Fiat 500.
Technology alliance
Nardelli earlier this week said Chrysler would get technology and other items worth up to US$10 billion under the alliance.
In his video, Nardelli said Chrysler was considering using four Fiat car architectures as well as two engines and transmissions.
Also in the video, Chrysler said an alliance with Fiat would help it leapfrog five years or six years ahead in fuel-efficient and clean-air technology.
Chrysler is working to meet the conditions of its US$4-billion federal loan and prove it deserves to get the additional US$5 billion it has requested.
Any deal with Fiat is contingent on the company gaining US government approval of its viability plan and the release of additional government money to Chrysler.
The statement said Fiat "intends to make absolutely clear that the proposed alliance will not entail the assumption of any current or future indebtedness to Chrysler."
On Thursday, Chrysler's chief executive said that Fiat would be responsible for 35 percent of Chrysler's debt to the United States government should a proposed alliance go through.
Fiat shares slipped 5.5 percent to 4.45 euros (US$6.08) on the Milan stock exchange early yesterday on the Chrysler statement. Shares recovered after the Fiat statement.
Bob Nardelli, chief executive officer of Chrysler, said in a video posted on the company's Website that the company can be viable on its own, but he said a deal with Fiat would enhance that viability.
Fiat is discussing trading its small-car and small-engine technology for a 35 percent stake in Chrysler in a non-cash deal. The agreement would help Chrysler bring badly needed small cars to its showrooms while helping Fiat re-enter the American market with the Alfa Romeo brand and the update of the iconic Fiat 500.
Technology alliance
Nardelli earlier this week said Chrysler would get technology and other items worth up to US$10 billion under the alliance.
In his video, Nardelli said Chrysler was considering using four Fiat car architectures as well as two engines and transmissions.
Also in the video, Chrysler said an alliance with Fiat would help it leapfrog five years or six years ahead in fuel-efficient and clean-air technology.
Chrysler is working to meet the conditions of its US$4-billion federal loan and prove it deserves to get the additional US$5 billion it has requested.
Any deal with Fiat is contingent on the company gaining US government approval of its viability plan and the release of additional government money to Chrysler.
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