In a few weeks, Fiat will be handed another 5 percent of Chrysler as brownie points for meeting another milestone in its agreement with the U.S. and Canadian governments. Another milestone will be reached in the fourth quarter, Sergio Marchionne told Reuters today. That will bring Fiat’s ownership in Chrysler to 35 percent. But Fiat and Marchionne want more: Majority control, i.e. 51 percent. That needs a bigger milestone: Repay a $7 billion government debt. Marchionne thinks he can do it.
By paying back what Marchionne called “shyster loans,” he would no longer have to pay what he called “shyster rates” of 10 percent – which cost Chrysler a cool $1 billion a year. (Before we get 200 comments again, see here.)
Marchionne told Reuters that Fiat could come up with the cash to raise the stake to 51 percent. “I’m satisfied with what we have done in the first quarter. It’s totally in line with what we have told the market. Our cash position is strong,” Marchionne said. Once the loan is paid back, the road to the IPO would be clear.
Maybe Sergio needs to visit the native American guy on TV who’s trying to loan money at 130%. “Yes, we know it’s not cheap, but you need it and we have it” is how he phrases it.
Debt forever
more and more I like this guy. talented and effective leadership is fun to watch. good luck Sergio.
btw…the Dodge ads are very cool.
And congratulations to your upcoming nuptials, Buickman! ( A hot blonde won the first prize.)
And if Sergio does achieve that 51%, he will effectively have neutralized the UAW and will maximize his Fiatsler production outside the US and minimize North American production by moving to the Latin American countries where Fiat can enjoy greater profits and better quality. This will put the Chrysler Division of Fiat back on track to profitability and viability. Smooth move, Exlax!
Is that a recent picture? If it is Sergio has been looking trimmer lately. In only slightly related news today Italy has it’s 50th government of the post WWII era. Anybody know enough international politics to know if that fact will affect anything?
Italy changes governments like most people change underwear so no, it probably won’t affect much. Plus ça change, plus c’est la même chose.
I thought Italy’s 50th government happened sometime in the 90s, though?
Bad analogy, psar, since many people have given up wearing underwear in today’s economy.
Ah, yes, “commando economics”.
Hey I got my news off one of those stupid monitors in my credit union. Didn’t have anything better to do but read it. And now I can’t find confirmation of the news on CNN or Yahoo News or any of that crap. WTF?
I’ve heard of the “emperor has no clothes”, but this is ridiculous…
Dan, at the risk of p’sing off Edward and Bertel by posting these other sites, if you are looking for this news you have to go to the WSJ/auto section, automotive news, the freep and detnews. Each had articles about this, as well as autoblog and kicking tires. For some odd reason each of the pro-UAW sites seem to think this is a good thing. I don’t think so. Fiat got Chrysler not only for free, but was bribed handsomely by the US government in the form of all sorts of bail outs and hand outs to keep the UAW members working and their pensions and benefits underwritten by the tax payers through PBGC. Fiat, OTOH, gets ready access to the US market and diversifies its Alfa-Romeo line using rebadged Chrysler products. A truly sweet deal for everyone involved EXCEPT the US tax payers who are going to take it in the shorts. That could be one reason why so many have given over to commando economics and have given up wearing underwear.
He looks like he could be related to Steve Jobs.
I’d better get my eyes checked, I read “Shyster to pay back FIAT loans”…
If Fiatsler screws the UAW, they risk losing 20-25% of their business (my guess) that comes from UAW members, retirees and family contacts of UAW members and retirees. This is volume that Chrysler can’t afford to lose.
Couple of points:
(1) What’s up with the transfers to Fiat?
This is Washington’s exit strategy for putting a private-sector, free-market veneer on an act of government buccaneering. Look for more milestones and transfers to happen before Obama runs again in 2012. Loan “repayments” won’t happen until closer to election day.
(2) What’s this about an “IPO” – ?
The only reason Fiat took on Chrysler was because they got it for free, with a chance to put it on the market one day and pocket the proceeds. That was always going to be Fiat’s payoff for helping the Obama administration solve the political problem created when it took over the auto companies for the purpose of shoveling taxpayer money to unions and blue states.