Fiat tries to refinance its own loan and Chrysler’s before it acquires the rest of the US automaker.
Analysts predict that Fiat will refinance the loans before the summer to take advantage of the favorable loan market conditions to reduce borrowing costs and to prepare the road for the further Chrysler acquisition. Fiat already owns 58.5% of Chrysler and still needs VEBA’s 41.5% stake to merge the two companies into the seventh largest auto group by sales.
Chrysler is also trying to convince banks to refinance a 6-year syndicated $3 billion term loan, taken in May 2011, part of a larger deal of $7.1 billion from the US government. Two bankers said that the penalty the US automaker has to pay for the refinancing the loan early falls to 1% this month, but the automaker is expected to launch it in late June.
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.