BALOCCO: Chrsyler is aiming to refinance $7 billion of US and Canadian government debt by June, clearing the way for Fiat to take a majority stake, the companies' chief executive said on Monday.
The US number three automaker, controlled by Fiat under a 2009 bailout, is in talks with investment banks. It must pay back government money before the Italian company can take ownership. "I believe I can do it," Sergio Marchionne, who is chief executive of both Fiat and Chrysler, said when asked about whether the debt would be refinanced by June.
"The conditions to take on an additional 16 percent (to take majority control) will be there."
Marchionne also said Fiat would likely use its own cash to pay for the additional 16 percent. He declined to give any valuation on how much that additional stake would cost.
Fiat has 25 percent of Chrysler and will announce a hike to 30 percent on Tuesday or in coming days as it meets a milestone to boost its holding, Marchionne said.
A third milestone allowing Fiat to own 35 percent of Chrysler will only be met in the fourth quarter of this year, Marchionne reiterated on Monday.
Fiat was given management control and a 20 percent stake in Chrysler's 2009 bailout. Fiat can raise its stake to 35 percent without putting any money in if it meets three tests designed to put the US automaker on firmer financial footing. Above that level, it will have to pay.
Marchionne said last month he wanted to raise the Chrysler stake to 51 percent this year but hinted taking the company public could be pushed into 2012.
Fiat then has an option to buy another 16 percent. Marchionne told reporters Fiat could pay cash to raise the stake to 51 percent.
CHRYSLER'S PERFORMANCE
Asked about Chrysler's performance, Marchionne said: "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 he was still confident Chrysler would confirm its $2 billion target for operating profit this year.
Marchionne said he was watching developments in Japan very carefully and said Chrysler's production would likely be hit by supply distruptions following the March 11 earthquake and tsunami.
He said Chrysler was "working on alternative arrangements" to address supply problems stemming from the Japanese situation.
Chrysler said on Wednesday that it was cutting some overtime work at some North American assembly plants due to parts shortages stemming from Japan's earthquake.
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