Fiat is eager to increase its stake in Chrysler Group LLC, as three sources familiar with the matter, indicated that the Italian auto manufacturer is looking to pay about $1.5 billion for another 16% stake in the company, which would raise the company’s stake to 46%.
Fiat is also working on raising another $2.17 billion through a credit facility, another source said.
As part of the terms of Chrysler’s reorganization some years ago, Chrysler must first repay the $7 billion it owes to the US and Canadian governments. Sergio Marchionne, who serves as CEO of both Chrysler and Fiat, said earlier in the week that Chrysler should have the government debt refinanced by June, thus allowing Fiat to increase its stake.
Fiat declined to comment on the issue.
As for the government debts, Chrysler is in advanced talks with four major banks on a deal that will replace the $7 billion in government loans to term loans and bonds. The banks are also said to be working on securing a revolving credit facility for Chrysler’s future liquidity. The revolver will not be used to pay down loans.
– By: Stephen Calogera
Source: Automotive News