Fiat To Pay Back Shyster Loans
In a few weeks, Fiat will be handed another 5 percent of Chrysler as brownie points for meeting another milestone in its agreement with the U.S. and Canadian governments. Another milestone will be reached in the fourth quarter, Sergio Marchionne told Reuters today. That will bring Fiat’s ownership in Chrysler to 35 percent. But Fiat and Marchionne want more: Majority control, i.e. 51 percent. That needs a bigger milestone: Repay a $7 billion government debt. Marchionne thinks he can do it.
By paying back what Marchionne called “shyster loans,” he would no longer have to pay what he called “shyster rates” of 10 percent – which cost Chrysler a cool $1 billion a year. (Before we get 200 comments again, see here.)
Marchionne told Reuters that Fiat could come up with the cash to raise the stake to 51 percent. “I’m satisfied with what we have done in the first quarter. It’s totally in line with what we have told the market. Our cash position is strong,” Marchionne said. Once the loan is paid back, the road to the IPO would be clear.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
More by Bertel Schmitt
Comments
Join the conversation
Is that a recent picture? If it is Sergio has been looking trimmer lately. In only slightly related news today Italy has it's 50th government of the post WWII era. Anybody know enough international politics to know if that fact will affect anything?
I'd better get my eyes checked, I read "Shyster to pay back FIAT loans"...
If Fiatsler screws the UAW, they risk losing 20-25% of their business (my guess) that comes from UAW members, retirees and family contacts of UAW members and retirees. This is volume that Chrysler can't afford to lose.
Couple of points: (1) What's up with the transfers to Fiat? This is Washington's exit strategy for putting a private-sector, free-market veneer on an act of government buccaneering. Look for more milestones and transfers to happen before Obama runs again in 2012. Loan "repayments" won't happen until closer to election day. (2) What's this about an "IPO" - ? The only reason Fiat took on Chrysler was because they got it for free, with a chance to put it on the market one day and pocket the proceeds. That was always going to be Fiat's payoff for helping the Obama administration solve the political problem created when it took over the auto companies for the purpose of shoveling taxpayer money to unions and blue states.