DETROIT (Reuters) - Sergio Marchionne, chief executive of both Fiat SpA FIA.MI and Chrysler Group LLC, said he wants to achieve “unification” of the two automakers by 2015, but first he needs to fix Fiat’s finances, which have been hit by a sagging European economy.
“The objective has always been to try and bring unification by 2014 or 2015,” Marchionne said on a Chrysler conference call on Tuesday. “I’d still like to see that done.”
Marchionne said that Fiat still intends to complete the purchase of all of Chrysler, but the Italian automaker must fix its own house before adding on to it.
“It is clear that given Fiat’s capital requirements and the availability of liquidity today,” said Marchionne. “It is highly unlikely that we would be able to finance a takeout of the minority stake in Chrysler, unless something extraordinary happens and we find liquidity through other means.”
How that comes about “has yet to be determined given the fact that our primary objective right now is that of fixing the European environment.”
Marchionne made his comments as he addressed Fiat’s plan to purchase the remaining 41.5 percent of Chrysler that it does not own. That stake is held by a United Auto Workers union healthcare trust for retired Chrysler workers, a voluntary employees beneficiary association (VEBA).
Fiat has raised its ownership to 58.5 percent of Chrysler, up from the 20 percent share it took after the U.S. automaker’s 2009 bankruptcy.
Marchionne said the only commitment he can make now is that Fiat will press ahead with its plan to purchase 3.3 percent of Chrysler every six months by exercising a call option allowed in the 2009 bankruptcy agreement with the U.S. Treasury.
Fiat can buy up to 16.58 percent of Chrysler in this fashion, which could increase Fiat’s stake in the Michigan-based automaker to about 75 percent.
Fiat sued the healthcare trust in September because the trust did not sell the 3.3 percent share in July as Fiat had filed for. The two sides differ on the price that Fiat is to pay for the increased share. Fiat offered $139.7 million.
Marchionne said on Tuesday that there was no update on the lawsuit.
The July call option was the first one to be exercised by Fiat. Marchionne has said Fiat plans to exercise another call option in January.
In 2007, Chrysler, General Motors Co (GM.N) and Ford Motor Co (F.N) each spun off their retired worker healthcare obligations into a separate trust. This enabled the automakers to offload what had become an unmanageable drain on their assets and enabled them to be more competitive with Japanese, German and Korean auto manufacturers in the U.S. auto market.
Reporting by Bernie Woodall; Editing by Gary Hill and Tim Dobbyn