From the onset, the first goal for Fiat has been to hit 35 percent ownership by the end of 2011, but sources tell AN that CEO Sergio Marchionne and his team are now aiming for 46 percent this summer. To hit that number, the automaker will need to pay down U.S. and Canadian government debt from the original $7.4 billion to under $4 billion. On Monday, Marchionne reportedly said that Fiat planned to speak with banks in an effort to refinance the loans. Earlier in the year, Marchionne referred to the government loans as " shyster loans," which, though he later apologized, tells us everything we need to know about the CEO's motivation.
As part of that agreement, Fiat has the option to pay down $1.14 billion in debt by the end of 2011, while waiting until next year will effectively raise the rate to $1.37 billion. That translates to a 20-percent interest rate for the year, which is high for a credit card, much less a government loan.
The next step for Fiat is to achieve another five percent ownership in Chrysler by the end of 2011. To do this, the automaker will need to sell a 40+ mile per gallon Dodge (likely a rebadged Fiat) and sell it in the U.S.
[Source: Automotive News – sub. req. | Image: Massimo Pinca/AP]