Fiat may sell assets to fund Chrysler deal

Bloomberg News reports this morning that analysts at Sanford C. Bernstein Ltd. say Fiat SpA may have to sell its CNH Global NV operation to get the cash needed to fund an alliance with Chrysler LLC.

In a note, Bernstein analysts, led by Max Warburton, told clients, “Given Fiat’s constrained fund-raising options we are growing increasingly concerned that Fiat may also need to sell its jewel assets to support auto industry expansion.”

CNH, formed by the merger of New Holland and J.I. Case, is one of the world’s largest manufacturers of agricultural and construction equipment. The analysts estimate a sale could bring as much as 8 billion euros (about $10.4 billion). Fiat could also sell its Iveco truck business, bringing as much as an additional 5 billion euros (about $6.5 billion). The two businesses provide almost two-thirds of Fiat SpA’s operating income.

One possible alternative is repayment of a $5 billion loan Fiat made to CNH’s financial arm. The unit, headquartered in the United States, has already filed for relief under the U.S. government’s bailout program.

Fiat CEO Sergio Marchionne has stressed that Fiat does not intend to make a cash investment in Chrysler. However, given the demands of Chrysler’s creditors and the reluctance of the UAW and CAW to agree to new concessions without major concessions from the banks may force Marchionne into a position where he must either make the investment or, as he has promised, simply walk away and let Chrysler go into bankruptcy at the end of the month.