Chrysler completes sales of assets to Fiat
- Source: xinhua
- [13:29 June 11 2009]
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Chrysler and Fiat wasted no time consummating the deal to get the new company up and running. The new Chrysler combines the most valuable assets of the bankrupt US automaker with small-car and engine technology from Fiat, which is not putting cash into the deal.
Fiat has an initial 20-percent stake in the company, which will grow to 35 percent on certain conditions and can increase to as much as 51 percent when all government loans are repaid. The US Treasury and the governments of Canada as well as Canada's Ontario province are providing 6 billion dollars in loans to the new company, on top of more than 7 billion dollars that the old Chrysler had received.
The new CEO said the Chrysler plants, which have been idled since Chrysler filed for bankruptcy protection on April 30, "will soon be back up and running, and work is already under way on developing new environmentally friendly, fuel-efficient, high-quality vehicles that we intend to become Chrysler's hallmark going forward."
According to a Detroit News report, Marchionne will bring Fiat management style to Chrysler, and the Italian automaker also offers its international distribution network to sell Chrysler vehicles in Europe, Latin America and Russia.
The new company will be governed by a nine-member board including Marchionne and two more Fiat appointees. Four directors will be appointed by the US government, one will come from the Canadian government and one from the United Auto Workers' retiree health trust fund.
Under the deal, Fiat's shareholding will expand to 35 percent if certain targets are met. The United Auto Workers union gets 55 percent of the new company, while the US and Canadian governments will take 8-percent and 2-percent stake, respectively.
Despite a US government bailout effort at the end of last year, Chrysler was forced into bankruptcy protection by depleted sales, huge debts and crippling labor, pension and healthcare costs.
The new Chrysler will still have its headquarters in the US state of Michigan and will produce Chrysler, Jeep and Dodge branded vehicles and Mopar spare parts.