We brought you news earlier today of the announcement in the US of Chrysler heading into bankruptcy protection and the impending strategic alliance formed with Fiat Group – read this news story here.
Fiat group has now released further details about the deal which outline the terms of the deal in much greater clarity and places markers down for Fiat to become the majority shareholder in the new business.
Under the terms agreed with both the US and Canadian governments, the ‘new’ Chrysler will initially be majority owned by the US Treasury (55%) with Fiat taking an initial 20% stake. Furthermore, the Italian giant has the option to increase this stake to 35% in 5% increments through meeting certain criteria set down in this agreement.
- Produce the FIRE family of engines in the USA
- Achievement of sales of Chrysler cars outside of Canada and the US
- Produce a Chrysler model based on Fiat technology
Fiat will also start with three directors on the nine-strong board of the new business, with a fourth appointment allowed at such time as Fiat’s shareholding is increased to 35%.
Scope for Fiat becoming the majority shareholder has been factored into the deal with the additional news that Fiat is to be granted the option of acquiring an extra 16% to give it 51% in a three and a half year period between January 1st 2013 and June 30th 2016. There are stipulations to the deal however with Fiat unable to exercise their additional 15% while loans from the US Treasury exceed $3bn, and the Italians cannot lay claim to 16% until all loans are repaid in full.
Reading between the lines the deal is essentially a blueprint for Fiat to take over Chrysler subject the US treasury getting its cash back, with assurances over US labour and plants.
What this means for the long term future of Chrysler badged cars in Europe and the UK remains unclear as yet. Let us know what you think of this news by leaving a comment below.
