Fiat won't take on new debt to buy Chrysler stake: CEO

VENICE, Italy Fri Jun 7, 2013 8:40am EDT

Fiat CEO Sergio Marchionne poses after the presentation of the new LaFerrari hybrid car on the Ferrari stand during the first media day of the 83rd Geneva Car Show at the Palexpo Arena in Geneva March 5, 2013. REUTERS/Denis Balibouse

Fiat CEO Sergio Marchionne poses after the presentation of the new LaFerrari hybrid car on the Ferrari stand during the first media day of the 83rd Geneva Car Show at the Palexpo Arena in Geneva March 5, 2013.

Credit: Reuters/Denis Balibouse

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VENICE, Italy (Reuters) - Carmaker Fiat SpA (FIA.MI) does not need to take on any new debt to buy out the rest of Chrysler, Chief Executive Sergio Marchionne said on Friday, rebuffing concerns about the cost of the looming deal.

Fiat and its U.S. unit Chrysler, in which the Italian group has a 58.5 percent stake, have 21 billion euros ($27.7 billion)in liquidity that can also be used for acquisitions, Marchionne said.

The 41.5 percent Chrysler stake held by the auto workers' union healthcare trust fund VEBA could cost Fiat $3.5 billion, said Morgan Stanley in a research report on June 5.

Fiat is expected to buy the stake and then merge the two manufacturers to create the world's seventh-largest auto group by sales, but the final cost remains to be seen and there are questions about whether it will lead to a credit rating downgrade.

"We have no immediate need for financing, we will not take on any new debt," Marchionne told reporters at a conference in Venice. Asked about reports that Fiat was in refinancing talks with banks for $10 billion, Marchionne said: "No, that figure is incorrect."

Marchionne confirmed Fiat will soon conclude refinancing for a 1.95 billion euro revolving credit line. And he added that the automaker is in talks to refinance debt at Chrysler, without specifying the amount.

Banking sources have said Chrysler wants to refinance a $3 billion, six-year syndicated term loan that it took out in May 2011.

Marchionne has said in the past that Fiat may need to raise capital in connection with the Chrysler purchase.

Marchionne also on Friday reiterated Chrysler's resistance to a recall of 2.7 million older-model Jeep vehicles, adding that the automaker is preparing to supply the National Highway Traffic Safety Administration (NHTSA) with information it had requested.

Chrysler has until June 18 to comply with the NHTSA's request and intends to do so, he said.

"We will supply them with a complete set of data," he said. "Based on all available data, these cars are absolutely safe and totally in line with what the industry was producing at the time. There is no design defect."

The NHTSA is seeking to recall the Jeep Grand Cherokee for model years 1993 to 2004 and the Jeep Liberty model years 2002 to 2007 for potential fuel leakage that could lead to a fire.

(Reporting by Jennifer Clark; Editing by Silvia Aloisi; Editing by David Holmes)

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Comments (2)
brotherkenny4 wrote:
So where are the politicians concerned with these foriegners taking over a US business? Or, is that just when it’s the Chinese? Or, are they afraid of the Italians and their social organization? Isn’t there numerous federal grants developing advanced technology with Chrysler, and doesn’t Chrysler have numerous defense contracts? Why would we leave our military vulnerable to the Italians. You know they were once part of the first Evil Axis, and fought along side the Nazis don’t you. Isn’t this just a way for the facists to get back at us for kicking their butts in WW2? I have concerns, and no one is willing to answer. What is it that these right wing senators and this fake liberal president are hiding?

Jun 07, 2013 1:13pm EDT  --  Report as abuse
and003 wrote:
Nice to know that Chrysler will provide complete data to NHTSA. With any luck, this will settle the issue once and for all.

Jun 13, 2013 10:51pm EDT  --  Report as abuse
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