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Fiat Looking For Higher Than Expected Loan

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On: Wed, May 18, 2011 at 4:43PM | By: Tim Healey

Fiat Looking For Higher Than Expected Loan

Now that Fiat has raised its stake in Chrysler, it's seeking to expand a credit line to $2.14 billion. Fiat will begin negotiating with banks as soon as it finalizes the purchase of a 16 percent stake in Chrysler for $1.27 billion.

That could give Fiat CEO Sergio Marchionne control of Chrysler two years sooner than planned. Right now, Marchionne is aiming to increase Fiat's stake to 46 percent in the second quarter, after Chrysler pays down $7.5 billion in loans to the U.S. and Canadian governments.

The new loan will replace a 1 billion Euro line of revolving credit that expires in February 2012.

Fiat is hoping that the new deal will be finalized by July, but it might take longer, depending on things are going on the market.

The company is trying to boost its finances in advance of taking a majority stake in Chrysler. Right now, the company has 13.1 billion Euros in liquidity.

Fiat's plan to take a majority stake of 51 percent in Chrysler by the end of 2011 in advance of an initial public offering may seem ambitious, but ambition has defined Marchionne and Chrysler virtually since Fiat become involved with the Chrysler Group. Chrysler has launched a flurry of new products—granted, some were in the pipe before the bankruptcy, and some of the models are simply refreshed versions of past nameplates—while also launching new marketing campaigns and becoming increasingly visible at auto shows and other events.

On top of that, Fiat has returned to the American market with the 500, and other models are on the way to American shores.

That's quite the change from two years ago, when the Chrysler was headed towards bankruptcy.

The future looks bright for Fiat/Chrysler, but it will likely look brighter if the loan deal goes through.


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