Fiat's CEO once called his employer "so worthless it could not be sold." As recently as 2003, Fiat lost $2.7b for the year. In the middle of its travails, Fiat CEO Sergio Marchionne jumped in bed with GM CEO Rick Wagoner. The Harvard MBA swapped six percent of GM's shares for 20 percent of Fiat's. And get this: Wagoner signed a "put option" obliging The General to buy the remaining 80 percent of the Italian car maker between January 2004 and July 2009. In 2005, GM paid Fiat $2b– not including lawyer's fees– NOT to consummate the transaction. GM's epic stupidity funded winning new models like the Fiat 500, Panda, and Grande Punto. Five years later, a resurgent Fiat has paid off ALL of it debts, turned a profit and kept a few hundred million in reserve. And now… Moody's and S&P have looked at Fiat's balance sheet and returned Fiat SpA to "junk" bond level status (again). Sergio Marchionne's response: "that's obscene." If so, the fact that the man who funded Fiat's turnaround is still the head of GM is pure pornography.
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I wonder why that is. With cash reserves and a seemingly clean balance sheet, I don’t see S&P’s rationale.
Of course, they’re the same guys who told us that subprime mortgage agencies were AAA rated….
But S&P are also the people who rate Detroit as “junk” and we quite happily accept, nay, QUOTE that fact when we’re writing our daily rants about Detroit’s dire status.
I say maybe we should take a closer look at FIAT and wonder why S&P think this. Maybe another deathwatch is on the books…..?
Fiat never left junk status:
http://www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUSL2873354720080128
They’re almost out of it, but they need to demonstrate that their turnaround has legs before they’re given an investment-grade rating.
Whatever sympathy I had for GM just evaporated. Just proves my theory…rise beyond a certain level in an organization and you will either a) never face the consequences for your ***k ups (Rick Wagoner) or b) if you do, you will walk away with a fortune anyway (Bob Nardelli).
Good thing these people are our captains of industry.
I would never trust an Italian balance sheet.
Landcrusher :
Where do you think the balance sheet was born?
http://en.wikipedia.org/wiki/Double_entry_accounting
I was going to say that the new rating seems to be better junk than before. Conversely, GM and Ford’s rating keeps getting more and more junky.
Sure Samir, but if they would only stop “improving” it. Seriously, in Italy, the tax bill negotiations start as they record the books.
That photo hurts to look at.