Tag Archive | "Fiat SpA"

Fiat Willing to Take Over Canada’s Chrysler Stake


TORONTO — The chief executive officer of Chrysler and Fiat said Monday he and Canadian authorities have begun talking about purchasing Canada’s 1.7 percent ownership in Chrysler.

The Canadian federal government and provincial Ontario government received 1.7 percent of Chrysler two years ago as part of a bailout that also provided $1.7 billion in loans to help the Detroit company survive.

Chrysler, already controlled by Fiat, recently paid back the last of the money it borrowed from the Canadian and American governments, reported The Detroit News.

Fiat then began the process of buying the shares owned by the U.S. government.

Chief executive Sergio Marchionne joined Canadian Finance Minister Jim Flaherty at a Chrysler Canada casting plant in Toronto on Monday to announce the loan repayment.

Marchionne said that he and Flaherty discussed buying Canada’s shares and said they are quite willing to consider purchasing them.

Unlike with the shares owed by the U.S. government, the company has no right to compel the Canadian government to sell.

Flaherty said Ottawa will wait to see how the stock transfer process unfolds in the United States before deciding whether Canada will also sell its shares.

The Turin, Italy-based automaker said Friday it will buy the U.S. government’s 6 percent stake in Chrysler under a process that was put in place in 2009 when Chrysler virtually shut down while in bankruptcy court.

Fiat initially received a 20 percent stake in Chrysler in 2009 for providing the automaker with management expertise and technology.

Since then Fiat has been increasing its holdings in Chrysler and will soon control more than half of the company.

Fiat has helped change the corporate strategy of Chrysler, brought new fuel-efficient vehicles quickly to market and made the company cut costs and operate more efficiently.

The future looks brighter for the company, which has cut thousands of jobs in the United States and Canada in its bid to survive bankruptcy.

In Canada, the company employs 9,000 people and has major assembly plants in Windsor and Brampton, a community northwest of Toronto.

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Fiat Plans to Boost Chrysler Stake to 57 Percent Buying Shares From U.S. Treasury


Fiat SpA plans to buy the U.S. government’s remaining stake in Chrysler Group LLC by the end of 2011, boosting the Italian carmaker’s holding to 57 percent.

The U.S. Treasury has been notified of the plan to exercise an option to purchase the government’s 6 percent stake in the nation’s third-largest automaker, Turin, Italy-based Fiat said today in a statement.

“They’re moving faster and more decisively than most investors anticipated,” said Max Warburton, a Sanford C. Bernstein & Co. analyst in London, who has a “market perform” rating on the stock. “It seems the plan is that Fiat-Chrysler will at some point be merged to create one firm.”

Fiat boosted its holding in Chrysler to 46 percent this week after the U.S. carmaker repaid $7.6 billion in U.S. and Canadian government loans, Bloomberg reported. Fiat expects to get an additional 5 percent stake in the fourth quarter in return for developing a fuel-efficient car for Auburn Hills, Michigan-based Chrysler.

The price for the shares will be negotiated between Fiat and the U.S. Treasury. If an agreement can’t be reached within 10 business days of the notice, the price will determined by investment-bank evaluations, Fiat said.

Chief Executive Officer Sergio Marchionne, who runs both automakers, said earlier this week that Fiat could boost its stake in Chrysler to more than 51 percent before an initial public offering of the U.S. automaker, as it seeks to buy the shares for less money. Fiat will consolidate Chrysler’s results starting June 1.

While Fiat and Chrysler have no set timing on their plan to merge to reduce costs and improve integration, the combination isn’t likely this year, Marchionne said May 25. Chrysler may sell shares to the public later this year or in 2012, depending upon market conditions and cash needs, he has said.

The companies’ new models in the U.S. have included the revamped Jeep Grand Cherokee and the Fiat 500 subcompact. The Grand Cherokee increased U.S. sales 86 percent through April, according to researcher Autodata Corp. That helped Chrysler’s global sales rise 18 percent through April and contributed to a first-quarter profit of $116 million, the automaker’s first since exiting bankruptcy in 2009.

“I don’t know anyone who wouldn’t be pleased that Fiat is paying back the U.S. taxpayers,” said Jim Gillette, an analyst with Northville, Michigan-based IHS Automotive. “Chrysler is bringing on some really good product with the help of Fiat and will very likely be in pretty good shape here over the next decade.”

Fiat has options to increase its Chrysler holding to more than 70 percent, the U.S. company said this month in a filing with the U.S. Securities and Exchange Commission. Those options include the right to buy the Treasury’s remaining stake in the 12 months after government loans are repaid.

That would make an IPO of Chrysler less likely, Jochen Gehrke, a Deutsche Bank AG analyst, said in a note.

The option to acquire 40 percent of the original stake held by the UAW trust is exercisable from July 1, 2012, to Dec. 31, 2016, and in amounts of as much as 8 percent in any six-month period, according to a company filing.

Eileen Wunderlich, a Chrysler spokeswoman, and Mark Paustenbach, a Treasury spokesman, declined to comment.

Fiat rose 12 cents, or 1.6 percent, to 7.20 euros in Milan today prior to the announcement, giving the company a market value of 8.88 billion euros ($12.7 billion).

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Fiat May Boost Chrysler Stake to More Than 51 Percent Before IPO, Marchionne Says


Fiat SpA may boost its stake in Chrysler Group LLC to more than 51 percent before an initial public offering of the U.S. automaker, as it seeks to buy the shares for less money.

“It’s possible” that Fiat will buy more Chrysler stock, Sergio Marchionne, chief executive officer of both companies, told reporters today in Turin, where the Italian carmaker is based. “The more we wait, the more it costs” to buy shares from the U.S. Treasury, he said.

Fiat boosted its holding in Chrysler to 46 percent yesterday after the U.S. carmaker repaid $7.6 billion in U.S. and Canadian government loans, reported Bloomberg. The CEO, wearing a “paid” pin on his trademark navy blue sweater, said Fiat will consolidate Chrysler results from June 1. Fiat expects to get an additional 5 percent stake in the fourth quarter, in return for developing a fuel-efficient car for Auburn Hills, Michigan-based Chrysler.

Fiat rose as much as 24 cents, or 3.4 percent, to 7.14 euros and traded at 7.11 euros, up 3 percent, at 11:55 a.m. in Milan, valuing the company at 8.7 billion euros ($12 billion).

“Marchionne is playing fast in the integration with Chrysler, and this is also good news for the shares,” said Wolfram Mrowetz, chairman of Alisei SIM in Milan, who oversees 200 million euros in assets including Fiat shares. “Marchionne is great at managing the financial aspects, now he has to also concentrate on products and regaining market share in Europe.”

A merger of Fiat and Chrysler is planned to reduce costs and improve integration, though there is no set timing and a combination isn’t likely this year, Marchionne said. The CEO is preparing to sell Chrysler shares to the public later this year or in 2012, depending upon market conditions and cash needs.

Fiat has options to increase its Chrysler holding to more than 70 percent, the U.S. company said this month in a filing with the U.S. Securities and Exchange Commission. Those options include the right to buy the Treasury’s remaining stake in the 12 months after government loans are repaid.

The U.S. government now owns 6.6 percent of Chrysler, Canadian authorities own 1.7 percent and a retiree health-care trust managed by the United Auto Workers union holds 45.7 percent, Eileen Wunderlich, a Chrysler spokeswoman, said in an e-mail.

Fiat also has an option to acquire 40 percent of the original stake held by the UAW trust, Chrysler said. The option is exercisable from July 1, 2012, to Dec. 31, 2016, and in amounts of as much as 8 percent in any six-month period, according to the filing.

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Chrysler Repays U.S., Canadian Governments as Fiat Increases Stake to 46 Percent


Chrysler Group LLC repaid $7.6 billion in U.S. and Canadian government loans, and Fiat SpA increased its stake in the automaker as it plans an initial public offering.

The U.S. government was repaid $5.9 billion, and Export Development Canada, which holds the debt for Canada and the Ontario provincial government, received $1.7 billion, Auburn Hills, Michigan-based Chrysler said today in a filing. Repaying the loans allowed Fiat to boost its stake in Chrysler to 46 percent from 30 percent, reported Bloomberg.

“In the eyes of most, Chrysler had been condemned to death,” Sergio Marchionne, chief executive of both automakers, said today in a speech at the company’s plant in Sterling Heights, Michigan. “Repayment of our government loans closes an important chapter in our history.”

Chrysler retired the loans by issuing new debt and using money Turin, Italy-based Fiat paid to increase its stake. The repayment comes almost two years after Chrysler emerged from U.S. government-backed bankruptcy reorganization that gave control of the automaker to Fiat.

“They’ve made remarkable strides,” David Cole, chairman emeritus at the Center for Automotive Research in Ann Arbor, Michigan, said in a telephone interview. “They’re in a position to be successful.”

Marchionne is preparing to sell Chrysler shares to the public later this year or in 2012, depending upon market conditions and cash needs.

Chrysler’s global sales rose 18 percent during the first quarter compared to last year, helped by increasing deliveries of the Jeep and Dodge brands. The automaker earlier this month reported a first-quarter net profit of $116 million, its first under Fiat.

Marchionne is pushing Chrysler to raise global sales 32 percent to 2 million vehicles this year and turn its first annual net profit since emerging from bankruptcy reorganization.

Marchionne has said he expects to get an additional 5 percent stake in Chrysler by the end of the year, giving Fiat 51 percent ownership.

Chrysler said it has more than $10 billion in liquidity following the repayment of the loans.

The U.S. government now owns 6.6 percent of Chrysler, the Canadian governments own 1.7 percent and a retiree health-care trust managed by the United Auto Workers union holds 45.7 percent, Eileen Wunderlich, a Chrysler spokeswoman, said in an e-mail. The Treasury said today it isn’t likely to recover its remaining $1.9 billion investment in Chrysler.

Ron Bloom, President Barack Obama’s special assistant for manufacturing policy, said the loans to Chrysler and General Motors Co. were a success because they saved jobs.

“Outsiders have concluded that had we not acted, 1 million jobs would have been lost,” Bloom said in a speech. “Since GM and Chrysler emerged from bankruptcy, the auto industry has added 115,000 jobs.”

The government will be “opportunistic” in selling its remaining stakes in GM and Chrysler, Bloom said in an interview.

“It doesn’t mean as soon as possible,” he said. “It also doesn’t mean being a long-term investor.”

Fiat has options to increase its Chrysler stake to more than 70 percent, Chrysler said this month in a filing with the U.S. Securities and Exchange Commission. Those options include the right to buy the U.S. Treasury’s remaining stake in the 12 months after it repays the government.

Fiat also has an option to acquire 40 percent of the original stake held by the UAW retiree health-care trust, Chrysler said. The option is exercisable from July 1, 2012, to Dec. 31, 2016, and in amounts of as much as 8 percent in any six-month period, according to the filing.

Fiat may be eager to increase its ownership in Chrysler before the U.S. automaker’s IPO, Max Warburton, a Sanford C. Bernstein & Co. analyst in London, wrote in a note to investors.

Marchionne is “acutely aware that acquiring additional equity in Chrysler once listed will prove to be more expensive than is currently the case,” he said.

Goldman Sachs Group Inc. advised Chrysler on the financing, and Evercore Partners Inc. advised the automaker’s finance committee, Chrysler said. Lazard Ltd. advised the Treasury on the transaction.

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Chrysler Will Pay Back U.S. Loans Tomorrow


Chrysler Group LLC, the U.S. automaker operated by Fiat SpA, expects to pay off its remaining debt to the U.S. Treasury Department tomorrow, said Sergio Marchionne, chief executive officer of both automakers.

Chrysler raised enough money in a debt offering to pay back the loans, letting Fiat boost its stake in the Auburn Hills, Michigan-based automaker to 46 percent, Marchionne told reporters today.

“Tomorrow is payoff day,” Marchionne said at the opening of a Fiat dealership in Macomb, Michigan. “Chrysler will again regain its independence.”

Marchionne raised $7.5 billion in loans, junk bonds and a revolving credit line to help pay back the government loans, reported Bloomberg. The face value of debts to the U.S. and Canadian governments was $7.53 billion, according to Chrysler’s Feb. 25 U.S. Securities and Exchange Commission filing.

Repaying the debt would allow Fiat, which now owns 30 percent of Chrysler, to exercise an option to purchase an additional 16 percent stake. Fiat gained control of Chrysler as part of the U.S. automaker’s government-backed restructuring.

Paying off the debt will save Chrysler more than $300 million a year in interest payments, Marchionne said.

Fiat may have 160 U.S. dealers open by the end of the year, Marchionne said. The brand will introduce a second model for the U.S. next year, joining the Fiat 500 subcompact, he said, adding that he hopes Fiat “will become a significant part of the American auto landscape.”

Marchionne has said he expects to gain an additional 5 percent stake in Chrysler by the end of the year, giving Turin, Italy-based Fiat a 51 percent stake.

Fiat can get as much as 76 percent of Chrysler by exercising options to acquire shares owned by the United Auto Workers union’s retiree health-care trust, Marchionne said.

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Fiat Said to Target $2 Billion Loan After Chrysler Stake Buy


Fiat SpA will seek to expand a credit line to as much as 1.5 billion euros ($2.14 billion) after raising its stake in Chrysler Group LLC, three people familiar with the matter said.

Fiat will start negotiations with banks after completing the purchase of an additional 16 percent of Chrysler for $1.27 billion, said the people, who declined to be named because the talks are private, reported Bloomberg.

The loan will replace a 1 billion-euro revolving credit line that expires in February 2012. On the new facility, Fiat plans to work with Credit Agricole SA, Intesa Sanpaolo SpA and UniCredit SpA, which arranged the existing loan, and may also bring in other lenders, two of the people said.

The Italian carmaker aims to complete the deal by July, though a transaction could take longer depending on market conditions, one person said.

A spokesman for Fiat, based in Turin, Italy, declined to comment on the company’s financing plan.

After gaining earlier today, Fiat fell as much as 8 cents, or 1.2 percent, to 6.80 euros and was down 0.5 percent as of 2:36 p.m. in Milan, valuing the company at 8.4 billion euros.

Fiat, which had 13.1 billion euros of liquidity at the end of March, has been bolstering its finances in preparation of taking a majority stake in Chrysler. The Italian carmaker sold 1 billion euros of five-year bonds last month, in its first public transaction since 2009. Fiat is rated Ba1 by Moody’s Investors Service, the highest non-investment grade.

Fiat Chief Executive Officer Sergio Marchionne is set to gain control of the American carmaker two years faster than planned. He aims to increase Fiat’s stake to 46 percent in the second quarter after completing transactions to repay Chrysler’s $7.5 billion of U.S. and Canadian government loans.

Marchionne, 58, who is also the CEO of Chrysler, aims to boost Fiat’s stake to 51 percent by the end of 2011 as he prepares the Auburn Hills, Michigan-based company for an initial public offering. Marchionne is pushing Chrysler to post its first net income this year since emerging from bankruptcy.

Chrysler increased a planned bond offering, making it the biggest high-yield offering in two years after lenders balked at the automaker’s proposed loan. The bond may price as soon as tomorrow.

The Obama administration tapped Marchionne, who now runs both automakers, to revive Chrysler after it emerged from bankruptcy in 2009. In exchange for sharing technology, management and reaching operating milestones, the U.S. and Canadian governments are granting Fiat 35 percent of Chrysler without paying any cash. The original deal was for Fiat to buy the final 16 percent stake in 2013.

Fiat received an additional 5 percent in Chrysler from the U.S. government last month, giving it a 30 percent holding, by reaching targets that included opening Fiat’s dealerships in Brazil to the American automaker’s vehicles.

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