Fiat has announced that
it has reached an agreement with the U.S. government
regarding the exercise of the Incremental Equity Call
Option which will give the Italian carmaker a
controlling share in the Chrysler Group once Treasury
Department loans are repaid.
Under this agreement,
Fiat will exercise in full its Incremental Equity Call
Option subject to and concurrently with the closing by
Chrysler, in the second quarter of 2011, of a
refinancing transaction in which Chrysler’s US and
Canadian government debt is fully repaid. Upon
completion of the transaction, Fiat’s interest in the
Chrysler Group will increase by an incremental 16
percent. The call option, which wasn't pegged to a fixed
amount, it has now been announced will be exercised at a
price of US$1,268 million.
Fiat has already
raised its initial post-Chapter 11 bankruptcy position
in the Chrysler Group of 20 percent up to 30 percent
through two increments of 5 percent. A tranche of 5
percent Fiat has already indicated will be completed
during this year, bringing its total stake to 35
percent. Exercising the call option to acquire a further
16 percent equity will bring Fiat's stake to a
controlling 51 percent.
"The transaction that
we are announcing [...] represents a historic step for
Fiat and Chrysler and is a source of great satisfaction
and pride for both," believes the Chairman of Fiat, John
Elkann. "Fiat, together with Chrysler, will create a
stronger automobile group, with a full range of
products, present in every market around the world and
able to compete with the best. Over the past couple of
years, Fiat and Chrysler have worked side by side with
commitment and mutual respect. With the contribution of
everyone who works with us and with the full support of
myself and my family, from today this spirit of
collaboration will become even stronger, as we continue
to produce appealing, fun, safe and eco-friendly
automobiles."
Fiat CEO, Sergio
Marchionne, said: "This is a fundamental step toward
completion of the momentous integration of Fiat and
Chrysler, initiated less than 2 years ago, that will
result in the creation of a global automaker. We have
chosen to accelerate the pace to bring about, in the
shortest possible time, the birth of a single group
capable of fully leveraging the joint development of the
respective international activities. Chrysler is
undergoing an extraordinary industrial and financial
turnaround and Fiat is ready to take control, in order
to bring even greater stability and strength to the
relationship in the interests of both. The transaction
announced today, together with the expected achievement
of a further 5% interest before year end, will enable us
to bring to fruition the vision upon which the alliance
was founded: the creation of an efficient and
competitive global automaker, possessing advanced
technologies and the determination to establish itself
as a leader in the sector. In so doing, we will be able
to guarantee our employees a more certain future and
challenging environment, where cultural exchange and
integration, together with a competitive spirit, will
provide the ideal conditions for their professional and
personal growth."
