Fiat could secure financing by next month for a possible buyout of the rest of Chrysler, according to Reuters citing two people familiar with the matter.

Reuters said Fiat was in advanced talks with banks on financing to buy the 41.5% of Chrysler which is held by VEBA, the United Auto Workers’ retirees’ healthcare trust.

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Fiat is looking to raise around US$4bn in new financing, said one of the sources, and is hoping to strike a deal with VEBA by early July. Chief executive Sergio Marchionne wants to merge the two carmakers to create the world’s seventh-largest auto group, tapping Chrysler’s cash flow to offset Fiat’s losses in Europe and building economies of scale.

Reuters noted that Fiat had cash reserves of about EUR9bn (US$11.91bn) on 31 December and would need to raise finance to merge with Chrysler to maintain the new group’s credit rating.

VEBA’s stake in Chrysler is worth an estimated $3.5-US$4bn according to analysts.

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