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Fiat-Chrysler group to get new name, CEO Marchionne says

Not worried about new debt, dismisses idea of capital increase

10 January, 12:52
Fiat-Chrysler group to get new name, CEO Marchionne says (ANSA) - Turin, January 10 - After sealing a deal to take full control of Chrysler, the Fiat Group will soon be given a brand new name, Fiat Group Chief Executive Sergio Marchionne said in an interview published Friday. The Italian automaker announced the $4.35-billion agreement on New Year's Day, after more than a year of negotiations with VEBA, a healthcare trust associated with the United Auto Workers union, to acquire the remaining 41.46% share of Chrysler.

Asked when the merger of the Italian and American automotive giants are set to take place, Marchionne told Italian newspaper La Repubblica, "I hope immediately, with the approval of Chrysler's 1.9-billion-euro dividend".

The new company will be listed "where there is easier access to capital. The market is more fluid in New York, but the board of directors will decide," Marchionne added.

Under the deal, Fiat and Chrysler will pay out $3.65 billion in cash to VEBA, sharing the cost, while Chrysler has agreed to paying over the next three years an additional $700 million.

The Fiat chief said he is "absolutely not" worried about the added debt the buyout will bring to the group. He dismissed the idea of a capital increase because "it would destroy value," but said convertible bonds "could be a suitable measure". The location of company headquarters, he said, will be decided "on the basis of of the stock market choice" but also has "a symbolic, emotional value".

Marchionne also assured the newspaper that all workers currently furloughed in Italy will be put back on assembly lines under the Fiat Group's new Italian strategy "to exit the mass market", where Italy's longstanding economic hardship has contributed to shrinking consumption and withering car sales, and to invest in "high-quality products", like its Alfa Romeo line.

The Cassino plant "is the best adapted for the relaunch of Alfa Romeo (both) structurally and for its productive capacity," Marchionne said. But Marchionne also added somewhat mysteriously that in "ghost factory sheds, camouflaged throughout Italy, teams of our men are preparing new Alfa Romeo models that we will announce in April".