Fiat to stay course on Chrysler despite court delay

By Ian Simpson and Poornima Gupta

MILAN/WASHINGTON (Reuters) - Italian automaker Fiat SpA will not walk away from its deal to buy bankrupt Chrysler LLC, a spokesman said on Tuesday after a U.S. Supreme Court order put the sale in doubt.

Both Chrysler and the Obama administration have said a long delay could kill the deal and result in Chrysler's liquidation. Fiat can abandon the accord if it does not close by June 15.

Taking over Chrysler is a big part of Chief Executive Sergio Marchionne's ambitious goal of vaulting Fiat, Europe's number-six automaker by unit sales, into the top ranks of world car makers.

"Fiat will not walk away from the deal if it isn't completed by the June 15 deadline," its spokesman said.

Fiat would not comment on the U.S. Supreme Court order until it had more information, he added.

Fiat and other automakers have been battered by an unprecedented sales crisis sparked by the global economic slowdown. Auto manufacturing has a global turnover of about $2.6 trillion, more than the gross domestic product of France.

In another sign of flux in the industry, German automaker Porsche said it was in exclusive talks with the Gulf state of Qatar that could ease Porsche's debt burden.

The Financial Times reported the the Qatar Investment Authority could take up to 25 percent of Porsche's holding company in a deal involving a capital increase of up to 4.5 billion euros.

GINSBURG ORDER

In a ruling on Monday, U.S. Supreme Court Justice Ruth Bader Ginsburg said the bankruptcy judge's orders allowing the Chrysler sale to Fiat were "stayed pending further order" by her or by the high court.

It was unclear what the next step would be. Many experts interpreted the action as giving the top court more time to weigh its response to a request by three Indiana pension funds and others for a stay of the deal.

Shares in Fiat pared early losses to be down 0.8 percent at 7.475 euros at 1215 GMT (8:15 a.m. EDT). The DJ Stoxx auto index was off 0.46 percent.

Arndt Ellinghorst, an analyst with Credit Suisse, said he would be surprised if Ginsburg's order threatened the Chrysler deal.

If it were blocked, Fiat then would have to go back to looking for potential partners in Europe, such as France's PSA Peugeot Citroen SA, he said.

"Fiat's bigger problem is lacking scale in Europe, not the potential entry into the U.S. market," he said. "The number of (merger) candidates is clearly getting smaller."