Fiat chief Sergio Marchionne has confirmed reports that US unit Chrysler is working on a US$3bn loan refinancing in order to lower its borrowing costs and make it possible for the Italian company to access its cash flow.

Fiat owns 58.5% of Chrysler and plans to buy up the rest. Marchionne said talks with the seller, an autoworkers' union-affiliated healthcare trust, are continuing. Reuters understands the completion of an agreement is expected on 21 June.

Fiat plans to merge the two carmakers into one group, then list the new company on the New York Stock Exchange by 2014, according to banking sources.

Although Marchionne already runs the two carmakers as a single group, a full merger with Chrysler is seen increasing the group's value and generating more cash to invest in new technology.