Fiat in Talks With Banks for Capital Increase to Buy Chrysler image

Fiat is currently in talks with four banks as it plans a 1-2 billion euro ($1.3-$2.6 billion) capital increase in 2013.

According to Il Messagero newspaper, Fiat is in talks the with the UniCredit, Morgan Stanley, Bank of America and Goldman Sachs banks as the automaker plans to gather the necessary cash to buy the rest of 41.5% of Chrysler. In November UBS gave Chrysler the estimative value of between $9 billion and $13.4 billion, which means that the 41.5% in the automaker is worth between $4.1 billion and $5.5 billion.

At the end of October Fiat was announcing that it had 9.8 billion euro in liquidity, and Chrysler 10.2 billion euro. Fiat and Chrysler CEO Sergio Marchionne is determined to buy the remaining 41.5% stake in the US automaker from VEBA, as this would give him the possibility to boost the Italian automaker’s earnings, restructure debt and also support its loss-making European operations until the economy will show signs of recovery.

Fiat’s bid to gain full control of Chrysler is expected to become more expensive in a few weeks. As Fiat and VEBA couldn’t decide upon the price of Chrysler’s stake, the matter was taken to the court. Fiat offered $754 million for the stake, while VEBA requested the double of this sum.