According to Fiat and Chrysler concurrent CEO Sergio Marchionne, Fiat SpA does not need to accumulate new debts in order to purchase the shares they do not own in Chrysler. The comments made by Marchionne were to alleviate concerns regarding the projected cost of the said transaction.
Fiat owns 58.5% in Chrysler and has a Eur21 billion or a US$27.7 billion war chest for the acquisition of the shares it does not own or other assets for acquisition.
The shares Fiat does not own, totalling 41.5%, is owned by the United Auto Workers healthcare trust fund VEBA. It is projected that the cost of this stake is at US$3.5 billion, according to a research report conducted by Morgan Stanley completed last June 5.
The plan is to have Fiat purchase the VEBA stake and then merge Fiat and Chrysler to create the seventh largest automaker in terms of sales. There are questions though as to the final cost of the purchase as well as questions on a possible downgrade in the new company's credit rating.
In a press conference held in Venice, Marchionne said, "We have no immediate need for financing, we will not take on any new debt."
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