Banks Might Lend Fiat $10 Billion to Acquire Chrysler image

According to Bloomberg, Fiat is in talks for a $10-billion financing from several banks, money it needs to buy the rest of Chrysler stake.

Relying on anonymous sources, the Bloomberg report says that the banks are currently discussing the possibility of lending Fiat the money it needs to buy the rest of 41.5% stake in Chrysler, owned by the United Auto Workers’ healthcare trust Veba. Fiat-Chrysler CEO Sergio Marchionne plans to acquire the US automaker by the end of summer, as it still awaits the court results of the dispute between the automaker and VEBA regarding the price for a 3% stake.

Fiat prepares a 2-step deal, which means that it will first buy the rest of Chrysler stake and then refinance its debt in a planned merger with the US automaker. The Italian automaker plans to create a new US company, merge Chrysler and Fiat into it and then issue shares in the combined entity. Therefore the current Fiat owners will exchange their shares for a stake in the newly created company, with the Agnelli family, which controls the Italian car maker, ending up with a minority stake.

Source: Reuters