Wednesday June 10, 03:28 PM
Chrysler, Fiat finalize global alliance
By Rob Lever
WASHINGTON (AFP) - Chrysler (Xetra: 710000 - news) and Fiat (Milan: F.MI - news) announced Wednesday they have finalized a global strategic alliance, forming a new Chrysler Group that will begin operations immediately.
The move completes a quick restructuring of the troubled number three US automaker in a plan orchestrated and backed financially by the administration of US President Barack Obama and the Canadian government.
The US Supreme Court late Tuesday lifted the last legal obstacles, affirming the plan approved by a US bankruptcy judge following Chrysler's April 30 bankruptcy filing.
Under the terms approved by the court, the company formerly known as Chrysler LLC "formally sold substantially all of its assets, without certain debts and liabilities, to a new company that will operate as Chrysler Group LLC," a Chrysler statement said.
Fiat will hold an initial 20 percent of Chrysler Group, with the equity interest rising up to 35 percent if certain milestones mandated by the agreement are achieved. Fiat cannot obtain a majority stake in Chrysler until all taxpayer funds are repaid.
"This is a very significant day, not only for Chrysler and its dedicated employees, who have persevered through a great deal of uncertainty during the past year, but for the global automotive industry as a whole," said Sergio Marchionne, the Fiat chief executive who will also hold the CEO title at the new Chrysler.
"We intend to build on Chrysler's culture of innovation and Fiat's complementary technology and expertise to expand Chrysler's product portfolio both in North America and overseas.
"Those Chrysler operations assumed by the new company that were idled during this process will soon be back up and running, and work is already underway on developing new environmentally friendly, fuel-efficient, high-quality vehicles that we intend to become Chrysler's hallmark going forward."
The Obama administration, which had extended emergency loans to Chrysler offered by the administration of his predecessor George W. Bush, insisted on the alliance as a way to keeping Chrysler viable.
Obama's auto task force said Chrysler, which had been losing money and market share since its separation from Germany's Daimler, could not survive on its own.
Fiat, which has not provided any cash for the alliance, will bring new technology to help Chrysler develop more fuel-efficient vehicles needed in the US and other markets.
The new Chrysler will be managed by a nine-member board, consisting of three directors to be appointed by Fiat, four to be appointed by the US government, one by the Canadian government and one by the United Auto Workers' Retiree Medical Benefits Trust.
The board was expected to name Robert Kidder, a veteran of US industry, as chairman.
The nine-member Supreme Court late Tuesday refused to extend a stay on the plan to weigh complaints from Chrysler investors who argued they would be short-changed and their rights' trampled by the Fiat deal.
In a two-page order, the court said the disgruntled investors -- a group of Indiana pension funds -- failed to show "that the circumstances justify" the stay placed on a lower court's approval of the deal.
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