ITALY: Fiat seeks to re-finance ahead of Chrysler bid
Fiat has launched the first part of a three-stage, multibillion euro finance package, aimed at refinancing loans taken out by the Italian carmaker and Chrysler ahead of the purchase of the rest of the US automaker, banking sources told Reuters.
The loans are expected to be refinanced before the summer to take advantage of strong market conditions which will reduce borrowing costs and build in the flexibility required to allow a potential acquisition to go ahead, the sources said.
Fiat owns 58.5% of Chrysler and is trying to buy the remaining 41.5% to merge the two carmakers into the world's seventh-largest auto group by sales. The potential M&A financing is on a longer timeframe and is anticipated after the summer according to bankers.
A EUR1.95bn (US$2.6bn) refinancing for Fiat has been launched to nine relationship banks, which have been asked to commit by mid-June, Reuters has been told.
Chrysler Group is also talking to banks about refinancing a US$3bn, six-year syndicated term loan that it took out in May 2011, reported Reuters. The loan was part of a bigger deal that repaid US$7.1bn of loans from the US government.
Early repayment penalties that Chrysler has to pay to refinance its loan fall to 1% in June and the company is expected to launch the refinancing shortly afterwards, in mid to late June, according to bankers.
Reuters noted Fiat has still to resolve a price dispute with US healthcare trust VEBA over 16.4% of VEBA's 41.5% stake in Chrysler before proceeding with a potential bid.