Moody's says Fiat's Chrysler purchase to materially weaken liquidity

MILAN Tue Jan 7, 2014 2:38pm EST

MILAN Jan 7 (Reuters) - Moody's said on Tuesday it had placed Fiat's ratings under review for downgrade because the car maker's cash position would be significantly weakened as a result of its plans to buy the stake of Chrysler it does not already own.

In a statement, the rating agency said it had placed Fiat's Ba3 corporate family rating on review for downgrade.

"The announced acquisition will materially weaken Fiat's liquidity position at a time when the company is still free cash flow negative," said Falk Frey, Moody's senior vice president and lead analyst for Fiat.

On Jan. 1 Fiat struck a $4.35 billion deal to gain full control of Chrysler Group LLC.

Moody's cited rising challenges in Latin America as one of the reasons for its move.