Fiat of Italy is negotiating with a number of lending institutions to purchase a stake in Chrysler through US$10 billion in loans and other instruments. The funds would also be used to refinance the automaker's outstanding debts and purchasing shares that Fiat does not already own.
Citing sources familiar with the transaction, Bloomberg reported that banks were to lend Fiat the funds to purchase 41.5% stake in Chrysler that is being held by VEBA, the healthcare trust fund of the United Auto Workers union.
Sergio Marchionne, concurrent CEO of Fiat and Chrysler, is planning to complete the said purchase by summer's end. This timetable though is dependent on the legal issue of computing the monetary worth of the Chrysler stake to be sold by VEBA.
Currently, Fiat owns 58.5% of Chrysler. The deal would be done through two steps, with the first being the purchase of the Chrysler stake and then refinancing the outstanding debt of the American unit before the planned merger.
Another option is to establish a new company through the merger of Fiat and Chrysler and then issue shares of the new company. Fiat and Chrysler shares would then be exchanged for the shares of the new company.
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