Fiat has enough capital to increase its stake in Chrysler to 51%, company president John Elkann told the daily Corriere della Sera.
Earlier this week Fiat increased its stake in the US company to 25% from 20% as part of a deal signed after Chrysler emerged from bankruptcy and it has an option to boost the stake to 51%. Elkann told the newspaper that the funds have already been marked out in Fiat’s balance sheet.
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This week’s 5% increase was made possible after Chrysler announced that it would begin production of new Fiat-designed Fully Integrated Robotized Engines (FIRE) in the US. The deal foresees a further increase of up to 35% once Chrysler has fulfilled certain conditions based on sales outside the US, Canada and Mexico and the production of a fuel-efficient Fiat model in the US.
Fiat will not have to pay anything to raise its stake to 35%, but will instead share its technology with Chrysler. The option to buy the further 16% can be taken up once loans from the US treasury have been repaid. Fiat and Chrysler chairman Sergio Marchionne said during the Detroit show that “if all goes to plan” those loans could be paid off during this year.
Elkann said Fiat would not be selling assets in order to finance an increase in its stake in Chrysler.
