Chrysler and Fiat finalize strategic alliance
Written by Johnathan Bodily
Fiat will contribute its world-class technology, platforms and powertrains for small and medium sized vehicles, allowing Chrysler the ability to offer an expanded product line including "environmentally friendly" vehicles increasingly in demand by consumers.
"This is a very significant day, not only for Chrysler and its dedicated employees, who have persevered through a great deal of uncertainty during the past year, but for the global automotive industry as a whole," said Sergio Marchionne, who was named CEO of Chrysler Group LLC. "From the very beginning, we have been adamant that this alliance must be a constructive and important step towards solving the problems impacting our industry. We now look forward to establishing a new paradigm for how automotive companies can operate profitably going forward.
Marchionne continued: "We intend to build on Chrysler's culture of innovation and Fiat's complementary technology and expertise to expand Chrysler's product portfolio both in North America and overseas. Those Chrysler operations assumed by the new company that were idled during this process have or will soon be back up and running, and work is already underway on developing new environmentally friendly, fuel-efficient, high-quality vehicles that we intend to become Chrysler's hallmark going forward."
"The same attributes that first attracted us to this alliance - a global automotive company with first-class technology, a devoted workforce, improved efficiency, a strong, global distribution network and an unyielding passion for building great cars that consumers want - are even more true today. While it does not solve every issue faced by the automotive industry today, this alliance, established with the full support of the Obama administration, is a very significant step toward positioning Fiat and Chrysler to be leaders among the next breed of global automakers. This has, I know, been a difficult process for everyone involved, but we are ready to prove to the American consumer that Chrysler can once again be a strong, competitive company that produces a full portfolio of reliable vehicles that capture the imagination and inspire loyalty." Marchionne said.
Under the terms approved by the U.S. Bankruptcy court in New York and various regulatory and antitrust regulators, the company formerly known as Chrysler LLC today formally sold substantially all of its assets, without certain debts and liabilities, to a new company that will operate as Chrysler Group LLC.
Chrysler group in turn issued to a subsidiary of Fiat a 20% equity interest on a fully diluted basis in the new company. Fiat has also agreed to transfer necessary technology, platforms, and powertrains to the new Chrysler. Fiat's equity interest will increase in increments by up to a total of 35% in the event that certain milestones mandated by the agreement are achieved. Fiat cannot obtain a majority stake in Chrysler until all taxpayer "TARP" funds have been repaid.
The UAW (United Auto Workers) retiree medical benefits trust, has been issued an equity interest in Chrysler group equal to 55% on a fully diluted basis. The U.S. Treasury and the Canadian government have been issued an equity interest equal to 8% and 2% on a fully diluted basis, respectively.
Chrysler has also entered into an agreement with GMAC Financial services to provide auto vinancing to the company's North American dealers and customers.
| Next > |
|---|