MILAN Feb 17 Indebted Italian carmaker Fiat
said on Monday that its access to the cash of U.S.
subsidiary Chrysler, which it took full control of last month,
was limited by a cap on dividends from the unit and its debt
Part of the motivation for the auto group's $4.35 billion
deal to take full ownership of the No. 3 U.S. carmaker was to
give Fiat access to Chrysler's finances so it could invest in
new models to revamp its loss-making operations in Europe.
Analysts have raised concerns about Fiat's growing debt pile
and its ability to fund a strategy that will shift the
automaker's focus to its upscale Maserati and Alfa Romeo brands
from an over-reliance on low-margin mass-market models.
Responding to a request for clarification from market
regulator Consob, Fiat said that beyond the cap, dividend
payments were also subject to the condition that Chrysler's
liquidity exceeds a threshold of $3 billion. It said Chrysler's
liquidity totalled $14.7 billion at the end of 2013.
Fiat also said intercompany financing was limited by
covenants that require deals to be approved by a majority of
"disinterested" members of the Chrysler board of directors.
Fiat said it had enough resources to fund its activities,
"On the basis of the group's available liquidity, credit
lines in place and available for investment in industrial
activities, in addition to the ability to access capital markets
... the group believes its capital resources are more than
adequate to meet the projected funding requirements," it said in
Following a rating cut by Moody's last week, Fiat said the
downgrade would only trigger a marginal rise in commitment fees
on a revolving credit line of 2.1 billion euros ($2.87 billion),
currently undrawn. The company also said it expects the
downgrade's impact on future borrowings to be limited.
Moody's cut Fiat's rating to four notches below investment
grade last week, citing weaker-than-expected 2013 results and
challenges to the carmaker's outlook for this year given eroding
profitability in Latin America.
Expanding on the 2014 outlook given at the end of January,
Fiat said it expected volumes and revenues in the EMEA region to
be "substantially in line with 2013", given flat demand and
In Latin America, a key market for the Italian auto group,
Fiat expects to maintain its market position despite higher
competition, while overall car demand in that region is forecast
to remain at 2013 levels.