Fiat says it won't walk away from Chrysler deal

• Source: xinhua
• [08:46 June 10 2009]
• Comments

Italian automaker Fiat SpA confirmed on Tuesday that it will not walk away from a deal with Chrysler LLC despite a US Supreme Court stay on the sale.

Under terms of the agreement, Fiat has the option to abandon the deal if it is not completed by June 15 but will not exercise it.

A Fiat spokesman disclosed that Fiat Chief Executive Sergio Marchionne had said, "we will go beyond June 15."

The US Supreme Court's decision Monday to temporarily halt the sale after three Indiana pension and construction funds challenged the deal could lead to a brief delay, or a longer one that could imperil the deal.

If Fiat were to walk away, Chrysler would have little option but to liquidate, US Treasury and Chrysler officials have said.

According to an affidavit filed in bankruptcy court, former Chrysler Vice Chairman Tom LaSorda spent months trying to line up deals with other automakers, but Fiat was the only company to agree to form an alliance with Chrysler.

The three Indiana funds, which hold a small part of Chrysler's debt, are contesting the sale on the grounds that it unfairly favors Chrysler's unsecured stakeholders ahead of secured debtholders like themselves.

Chrysler claims the agreement with Fiat is the best deal it can get for its assets and is critical to the company's plan to emerge from bankruptcy protection.

Fiat has offered its small car and environmentally friendly engine technology, as well as management expertise, in exchange for an initial 20 percent stake in Chrysler, which will grow to 35percent in 5 percentage point increments.