Chrysler: Fiat to assume 35 percent of debt

[SVT666]

Chrysler: Fiat to assume 35 percent of debt

Chrysler announced today that its proposed partner, Italian automaker Fiat, would assume 35 percent of its debt to the United States government. Fiat is seeking to acquire 35 percent of Chrysler, a move that analysts say is likely the Michigan automaker?s only chance at survival. Chrysler also announced that it will no longer pay retention bonuses to its executives.

Chrysler received $4 billion in low-interest loans from the U.S. government earlier this year. The automaker has also requested a further $5 billion in loans. Assuming Chrysler is granted the additional $5 billion and the U.S. Treasury approves the proposed alliance, Fiat would be responsible for $3.15 billion in debt.
?That?s a significant commitment for Fiat,? Brad Coulter, a restructuring adviser at O?Keefe & Associates, told Reuters.

Chrysler has said that the Fiat deal would be worth about $10 billion to the automaker and it would preserve about 5,000 jobs that would otherwise be lost if Chrysler were to fail.

In addition, the automaker announced in a media statement that ?no new retention payments or any other form of bonus, will be awarded after January 2, 2009 as a result of the waivers signed by the company?s top 25 executives.?

The move comes following public concern over bonuses paid to American International Group?s $165 million in retention bonuses earlier this week. AIG received about $180 billion in government aid to keep the company afloat.

[Nethead]

Consider Fiat's situation:

If they agree to this deal, they are then:
A.  Aligned with Cerberus/Chrysler
B.  $3.15 billion in debt before any money has been spent at all
     on possible jointly developed vehicles (likely to be merely re-badged
     European Fiats at best, anyway, so the term "jointly developed" may
     be more of an avuncular wink in the boardroom).

Who would want either of the above?  Anyone intelligent, that is.

[Galaxy]

Consider Fiat's situation:

If they agree to this deal, they are then:
A.  Aligned with Cerberus/Chrysler
B.  $3.15 billion in debt before any money has been spent at all
     on possible jointly developed vehicles (likely to be merely re-badged
     European Fiats at best, anyway, so the term "jointly developed" may
     be more of an avuncular wink in the boardroom).

Who would want either of the above?  Anyone intelligent, that is.

It is only ?2.25 billion at current exchange rates, keep that in mind. Also it would take years for Fiat to build their own dealer, factory network in the US.

[2o6]

Consider Fiat's situation:

If they agree to this deal, they are then:
A.  Aligned with Cerberus/Chrysler
B.  $3.15 billion in debt before any money has been spent at all
     on possible jointly developed vehicles (likely to be merely re-badged
     European Fiats at best, anyway, so the term "jointly developed" may
     be more of an avuncular wink in the boardroom).

Who would want either of the above?  Anyone intelligent, that is.

They'd also have an instant dealer network and a number of factories and resources in the US (and Canada) to use.

[SVT666]

Fiat: Won?t assume any Chrysler debt

In what could be the first-ever skirmish in the proposed Fiat-Chrysler merger, the Italian automaker reacted negatively to its potential Detroit partner?s announcement that Fiat would assume 35 percent of Chrysler?s debt. Fiat, the automaker said, does not plan to take on any of Chrysler?s debt to the United States government.

In a statement, Fiat announced that it ?intends to make absolutely clear that the proposed alliance will not entail the assumption of any current or future indebtedness to Chrysler.?

Yesterday, Chrysler?s went on record saying that Fiat would take on 35 percent of Chrysler?s debt when it acquired the same percent of the automaker in a no-cash deal.

If there?s a reaction from Chrysler - it?s still early up in Auburn Hills - we?ll let you know what it is.

[the Teuton]

I think Fiat learned about this sort of thing when they ended their alliance with GM, and they don't want to be on the other end of the mistake this time.

[Nethead]

He said.  
She said.