Fiat CEO: Chrysler still gearing up for 2011 IPO

LOS ANGELES Wed Nov 17, 2010 3:14am EST

1 of 2. A worker polishes a Fiat logo during the launch of Chrysler's flagship showroom in Los Angeles November 16, 2010.

Credit: Reuters/Mario Anzuoni

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LOS ANGELES (Reuters) - The success of General Motors Co's IPO, potentially the largest U.S. offering ever, bodes well for Chrysler's own envisioned share sale, Fiat SpA FIA.MI CEO Sergio Marchionne said on Tuesday.

But the Italian executive told Reuters the strong take-up for the landmark IPO did not change the timing of Chrysler's public debut, which he reaffirmed was still set for the second half of 2011.

Chrysler was on the brink of liquidation in 2009 before a U.S. government-funded bankruptcy slashed its operating costs and handed majority ownership to a union-affiliated trust fund and management control to Fiat, Europe's sixth largest car maker.

"It will give us the logistics of what this market is looking for, as far as pricing expectations," Marchionne said in a brief interview on the sidelines of the launch of Chrysler's flagship showroom in downtown Los Angeles.

"This will give us a great, great precursor for the Chrysler IPO. I'm delighted, it couldn't have gone better."

Chrysler now employs 52,000 -- up from less than 40,000 a year and a half ago, which Marchionne argues has an impact that reaches beyond just adding 12,000 jobs to the economy.

"I don't care what multiplier you use, 1 to 4, 1 to 5, 1 to 7, including the pizza guy. If you go far enough down the chain, I think the multiplier effect is huge," he said. "It just reinforces the fact that President Obama did the right thing. He saw it."

PERMANENCE

As a condition for the government bailout of the struggling auto maker, Chrysler -- of which Fiat now owns 20 percent -- took on loans at excessively high interest rates of about 12 percent.

Marchionne said Chrysler was now in "preliminary, exploratory" talks with a number of financial institutions to try and refinance that expensive debt.

"We should have a firm idea within the first half. We'll probably execute for the second half of 2011," he said from the rooftop of the four-story showroom. We want "a permanent capital structure as quickly as we can."

The U.S. firm, now in the midst of a overhaul of its model lineup, has impressed some auto critics and analysts who tested eight new models last week and said they showed much improvement over the vehicles they will replace.

Addressing speculation that Fiat may be pondering a sale of super car makers Ferrari at the right price, Marchionne said Fiat had no such plans at the moment.

Additional reporting by Edwin Chan)

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