Fiat will expand a credit line to as much as 2 billion euros ($2.8 billion) this week as CEO Sergio Marchionne aims to improve financing flexibility after the carmaker gained control of Chrysler. Hit the jump to read the rest of the story.
Funk Flex
Fiat, which had 13.1 billion euros of liquidity at the end of March, has been bolstering its finances in preparation to take a majority stake in Chrysler. Fiat agreed June 3 to pay $500 million for the U.S. government’s remaining 6 percent stake in Chrysler, boosting its holding to 52 percent.
Fiat, which was initially granted a 20 percent stake in Chrysler by the U.S. government, aims to hold 57 percent of the third-biggest U.S. automaker by the end of 2011, when Marchionne expects to receive an additional 5 percent stake in the fourth quarter in return for developing a fuel-efficient car for Chrysler.
The loan will replace a 1 billion-euro revolving credit line that expires in February 2012. Fiat agreed on the new facility with Credit Agricole SA, Intesa Sanpaolo S.p.A. and UniCredit S.p.A., which arranged the existing loan, and six other banks, according to the people, who asked not to be named because the talks are private.
The Italian carmaker sold 1.5 billion euros of bonds last week, after selling 1 billion euros in April. Fiat and Chrysler CEO Marchionne plans to merge the two carmakers to reduce costs and improve integration. The timing of the merger isn’t set and the combination isn’t likely this year, Marchionne said May 25 in Turin. The automaker consolidated Chrysler’s results starting May 24, a sign of the rapid integration of the carmakers since the manufacturer exited bankruptcy in June 2009.
