Fiat SpA has rejected reports that it will assume any current or future debt from Chrysler, with which it is planning to enter a partnership.
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According to US reports, Chrysler had said earlier the Italian manufacturer would assume responsibility for Chrysler’s debt equal to its equity stake.
However, in a statement on its website, Fiat contradicted this stance, saying: “In response to recent news regarding the proposed alliance between Fiat and Chrysler, Fiat Group intends to make it absolutely clear that the proposed alliance will not entail the assumption of any current or future indebtedness of Chrysler.”
Separately, the US automaker said in a statement it would no longer pay retention bonuses to key executives.
“No new retention payments or any other form of bonus, will be awarded after 2 January 2009 as a result of the waivers signed by the company’s top 25 executives,” Chrysler said.
Under the proposed Fiat Chrysler alliance, Fiat would make available its entire product range and powertrain technology. Fiat’s worldwide distribution system would also be used for Chrysler vehicles and the two companies would achieve cooperate in purchasing, engineering and other areas. Chrysler plants in North America are also expected to start assembling Fiat (likely starting with the Mini-rivalling 500) and Alfa Romeo models ahead of the brands’ relaunch in markets abandoned in the ’80s and 90s.
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By GlobalDataEarlier this week, Chrysler chairman and CEO Bob Nardelli said in an email to employees that he estimated the cash value of Fiat’s contribution to the company at $8bn to $10bn based on what it would cost Chrysler alone to develop and build the vehicles the Italian automaker would help with.
“We estimate the cash value of Fiat’s contribution to be between $8bn and $10bn considering the cost to develop these vehicles, platforms and powertrains from scratch,” Nardelli said.
“In addition, production of vehicles for Fiat in North America will allow Chrysler to increase its plant utilisation, helping to preserve and create in excess of 5,000 manufacturing jobs,” he said.
