Fiat does not need to take on any new debt to buy out the rest of Chrysler, chief executive Sergio Marchionne has said, rebuffing concerns about the cost of the looming deal.
Fiat and Chrysler, in which the Italian group has a 58.5% stake, have EUR21bn (GBP17.8bn) in liquidity that can also be used for acquisitions, Marchionne said, according to Reuters.
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The 41.5% Chrysler stake held by the auto workers’ union healthcare trust fund VEBA could cost Fiat US$3.5bn according to a 5 June Morgan Stanley research report.
Fiat is expected to buy the stake and then merge the two manufacturers to create the world’s seventh-largest auto group by sales but the final cost remains to be seen and there are questions about whether it will lead to a credit rating downgrade, Reuters noted.
“We have no immediate need for financing, we will not take on any new debt,” Marchionne told reporters at a conference in Venice. Asked about reports that Fiat was in refinancing talks with banks for $10bn, Marchionne said: “No, that figure is incorrect.”
Marchionne confirmed Fiat would soon conclude refinancing for a EUR1.95bn revolving credit line. He added the automaker is in talks to refinance debt at Chrysler, without specifying the amount.
Banking sources have said Chrysler wants to refinance a $3bn, six-year syndicated term loan that it took out in May 2011, the report said.
Marchionne has said in the past that Fiat may need to raise capital in connection with the Chrysler purchase.
