Bailout Watch 352: Chrysler – Fiat Deal Depends on ChryCo Bailout Bucks
Chicken and egg this. If Chrysler doesn’t score an additional $3b worth of bailout bucks, Fiat can/will walk away from their agreement to “buy” 35 percent of the ailing American automaker. The Wall Street Journa l quotes “people familiar with the pact” to substantiate the proviso. Equally anonymous sources told the Journal (we hope) that if the loans go through, Fiat will take three seats on Chrysler’s Board of Directors. And then, “If Fiat meets goals for improving Chrysler’s operations within 12 months of the agreement, Fiat would have the option of buying an additional 20% of Chrysler for about $25 million, said people familiar with the matter. Details of the goals weren’t clear.” Twenty-five million? They’re joking right? Or is that the amount Cerberus would pay Fiat for 20 percent of Chrysler?
On this and the general outlines of the deal, the official spokesfolk are staying stum. “A Fiat spokesman declined to comment on the matter. Chrysler spokeswoman Shawn Morgan wouldn’t comment on Fiat’s demand, but said Chrysler believes the $3 billion in loans are necessary for its viability.”
So what’s it all about Alfie? “‘Chrysler’s got to get revenue going now,’ said one supplier-company executive who works closely with the company. The Fiat partnership ‘gives them a better story’ to present while asking for additional government help, but ‘doesn’t change what’s happening on the ground.'” Roger that.
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LLC - You didn't get the memo on Obama giving us all jobs and showering us with stimulus cash?
"Does anybody else find it absurd that US taxpayers are subsidizing the transfer of a controlling share of equity to a foreign entity?" mdh, FTW. "Wait, if 20% of Chrysler only costs $25M, by that rationale shouldn’t we taxpayers already OWN the damn company THIRTY TIMES OVER as of December?" jgh, makes it a TIE! The B&B see through this charade. Cerberus is using Fiat to sweeten their story to the US government in order to hoover more billions. Once they're done, they flip the keys (of the wreck) to Fiat for nothing. The Italians can decide how much to keep, how much to close. More close, less keep. Cerberus gets away scot-free (well, better than free...remember, they used OPM to buy Chrysler in the first place...and remember, Benz wrote down their 19% position in Chrysler to 0 a couple months ago), with our (children's future tax bill) billions in their bank account. Wake up, America.
Fiat, Lotus, Audi, or Gm...It's a business. If Fiat was conspiring with chryco to heist the obamabucks then they wouldn't put all these deal killer poison pills in the document. Car business is not over, the sky is not falling, we are on the other side of this deal I can assure you. You will see Feb sales up, March auto sales WAY THE HELL UP from previous months, close to 07 comparisons. As a dealer I already see the lenders loosening WAY WAY up, someone is going to buy chrysler for their truck line before it is actually worth something again. Remeber where you heard that, bc you heard it from me.
jwolfe: Agree with your two posts. That's why I said keep Jeep simple:Wrangler and a Cherokee thingy. Dodge: just pick-ups and derivatives. Plymouth-Fiat clones. Chryssler: Big aspirational cars and if that doesn't work you can always phase it out and replace them completely with Alfa Romeos and Maseratis. Sometimes, a smaller but stronger line is better, and more profitable. Sometimes less is more. And beautiful and profitable.