Fiat says it won't assume Chrysler debt in deal
The Italian automaker Fiat said that it won't assume Chrysler LLC debt - current or future - in deal for a 35 per cent stake, contradicting statements from Chrysler's chief executive that it would.business Updated: Mar 20, 2009 21:14 IST
The Italian automaker Fiat said on Friday that it won't assume Chrysler LLC debt - current or future - in deal for a 35 per cent stake, contradicting statements from Chrysler's chief executive that it would.
The statement said the Fiat Group "intends to make absolutely clear that the proposed alliance will not entail the assumption of any current or future indebtedness to Chrysler."
By contrast, Chrysler's chief executive said on Thursday the Italian automaker would be responsible for 35 per cent of Chrysler's debt to the US government should a proposed alliance go through. Fiat shares slipped 5.5 per cent to euro4.45 ($6.08) on the Milan stock exchange early Friday on the Chrysler statement.
After the Fiat statement shares recovered to euro4.64 ($6.34). CEO Bob Nardelli said in a video posted Thursday on Chrysler's Web site 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 per cent 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.
Nardelli earlier this week said that Chrysler would get technology and other items worth $8 billion to $10 billion under the alliance, a contribution Nardelli said would be equal to or greater than the loans Chrysler is seeking from the US government.
In a video on Thursday, Nardelli said Chrysler is considering using four Fiat car architectures as well as two engines and transmissions. Those architectures would be in the categories of micro, subcompact and compact cars, said Chrysler spokesman David Elshoff.
Also in the video, Chrysler said an alliance with Fiat would help it leapfrog five or six years ahead in development of fuel-efficient and clean-air technology.
Chrysler is working to meet the conditions of its $4 billion federal loan and prove it deserves to get the additional $5 billion it has requested.
Any deal with Fiat is contingent upon the company gaining US government approval of its viability plan and the release of additional government loan money to Chrysler.
Fiat CEO Sergio Marchionne has testified on the deal before Obama administration's auto industry task force.