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Fiat could buy additional 16% of Chrysler within months

by Bill Cawthon on

Automotive News is reporting that Fiat SpA may acquire the additional 16% of Chrysler that it is allowed under its agreement with the U.S. government before qualifying for the last five percent it can receive for meeting a final performance milestone.

According to Italian newspaper Corriere della Sera, discussions with investment bankers to refinance Chrysler’s multi-billion-dollar debts to the U.S. and Canadian governments are at an advanced stage. Chrysler’s total debt must be reduced to about $4 billion before Fiat can exercise a purchase option. Unnamed insider sources say it’s possible everything could be in place by June, reaffirming remarks made by CEO Sergio Marchioone on Monday.

Refinancing the debt could save Chrysler and Fiat hundreds of millions by reducing the interest rates and allowing Fiat to exercise its call option in 2011 instead of 2012 or later, a move that, by itself, could save $250 million.

Marchionne maintains a goal of Fiat having a majority stake in Chrysler by the end of 2011 and in advance of an initial public offering.

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.

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