S&P: Fiat's Turnaround is Junk
Fiat's CEO once called his employer " so worthless it could not be sold." As recently as 2003, Fiat lost $2.7b for the year. In the middle of its travails, Fiat CEO Sergio Marchionne jumped in bed with GM CEO Rick Wagoner. The Harvard MBA swapped six percent of GM's shares for 20 percent of Fiat's. And get this: Wagoner signed a "put option" obliging The General to buy the remaining 80 percent of the Italian car maker between January 2004 and July 2009. In 2005, GM paid Fiat $2b– not including lawyer's fees– NOT to consummate the transaction. GM's epic stupidity funded winning new models like the Fiat 500, Panda, and Grande Punto. Five years later, a resurgent Fiat has paid off ALL of it debts, turned a profit and kept a few hundred million in reserve. And now… Moody's and S&P have looked at Fiat's balance sheet and returned Fiat SpA to "junk" bond level status (again). Sergio Marchionne's response: "that's obscene." If so, the fact that the man who funded Fiat's turnaround is still the head of GM is pure pornography.