According to an article published last week by Bloomberg, Fiat SpA is in talks for as much as $10 billion in financing from a pool of banks to buy the Chrysler Group LLC stake it doesn’t own and refinance the two automakers’ debt, people familiar with the matter said. The banks, which include Bank of America, Deutsche Bank AG, Goldman Sachs and BNP Paribas, are discussing loaning Fiat the money to purchase the 41.5 percent of the American carmaker held by the United Auto Workers’ retiree health-care trust, said the people, who asked not to be identified because the discussions are private.
Fiat, which has accumulated a 58.5 percent holding since taking control of Chrysler in 2009 as it emerged from bankruptcy, aims to complete the purchase of the remaining stake by the end of the summer, the article stated.
The Bloomberg article continues by stating that Fiat SpA Chief Executive Officer Sergio Marchionne, who runs both Fiat and Chrysler Group LLC, plans to combine the two manufacturers to forge a global automaking group to challenge General Motors Co. and Volkswagen AG.
Fiat is planning a two-step deal, with the Italian carmaker first buying the stake, and later refinancing the debt of both companies at lower interest rates, the people said. Italy’s biggest manufacturer may pay as much as $3.5 billion for the rest of Chrysler, UBS estimates. The two together had 7.1 billion euros of net industrial debt at the end of March.
One option being explored is to create a new company in the U.S., merge Fiat and Chrysler into it and issue shares in the combined entity, one source said. The merged company will reportedly have both Fiat and Chrysler in its name.
Marchionne said last month that he’d like to complete the merger of the two companies in June of next year, when he completes his 10th year at the helm.
To read the complete Bloomberg article, click here.
