Fiat Close to Secure Financing to Buy Chrysler image

According to anonymous sources, Fiat might secure financing to buy the rest of Chrysler next month.

Currently Fiat is in talks with several banks which are expected to conclude in May whether they will offer the company financing to purchase the rest of 41.5% in Chrysler, currently owned by UAW’s retirees’ healthcare trust called VEBA. Fiat needs to raise around 3 billion euro in new financing to be able to by the rest of the stake.

Sergio Marchionne, Fiat and Chrysler CEO, plans to merge the two automakers and create the seventh largest auto group, also relying on Chrysler’s cash flow to help Fiat make up for the loss in Europe and build economies of scale. Tomorrow, April 25th, a US court might decide the final price for the rest of Chrysler’s stake, which has become a legal debate between VEBA and Fiat.

Even if Fiat declared at the end of December it has cash reserves of about 9 billion euro, the automaker still needs to raise finance so that after the merge with Chrysler it can maintain the credit rating for the newly created group. Analysts estimate that the price for the rest of Chrysler’s stake could reach $4 billion.

Source: Reuters