UPDATE: Fiat To Seal Chrysler Deal As US Court Clears Obstacles
10 Juni 2009 - 12:03PM
Dow Jones News
Fiat SpA (F.MI) said Wednesday it expects to sign soon the
closing of its deal with Chrysler LLC after the U.S. Supreme Court
late Tuesday rejected creditors' objections, paving the way for the
U.S. car maker to emerge from bankruptcy reorganization.
Shares of Fiat gained on the news as investors had expected the
court decision to be delayed by several days. At 0920 GMT, Fiat's
shares were up 4.6% at EUR7.77 in Milan, outperforming the FTSE Mib
index.
"The U.S. court news was a surprise," said Carlo Drago, analyst
at Milan-based Centrosim.
Chrysler filed for bankruptcy on April 30 and the U.S.
government said it was going to seek a solution in 60 days.
Tuesday's supreme court move is a key victory for the Obama
administration as its plan to remake the American auto industry by
pushing Chrysler and General Motors Corp. (GMGMQ) through quick
restructuring under Chapter 11 bankruptcy proceedings. The
government has already injected almost $9 billion in emergency
funding into Chrysler since late last year.
As part of the reorganization plan, the new Chrysler will be
owned 20% by Fiat, together with the U.S. and Canadian governments,
while over 67% will be controlled by the United Auto Workers.
Fiat's 20% stake could increase to 35% if the new company meets
benchmarks intended to ensure the development of fuel-efficent
vehicles in the U.S., and it has the option to become the majority
stakeholder once U.S. loans have been repaid.
The nine-member board of Chrysler will include Fiat Chief
Executive Sergio Marchionne, who will hold the same post, Fiat
Powertrain chief executive Alfredo Altavilla, as well as the former
vice-chairman of ExxonMobil Lucio Noto.
Fiat will supply the U.S. automaker with engine technology and
auto platforms as part of a non-cash agreement struck by
Marchionne.
Equita analysts Wednesday noted that Fiat has the "not-too-easy"
task of restructuring a company (Chrysler) that is losing about
$100 million a day.
Company Web site: www.fiatgroup.com
-By Sabrina Cohen, Dow Jones Newswires, +39 02 5821 9906;
sabrina.cohen@dowjones.com
(Luca Casiraghi and Marco Fusi contributed to this story.)