Fiat SpA's chief executive said there were other options to a
partnership with troubled U.S. car maker Chrysler LLC although he still
wanted seal the deal by the April 30 deadline set by Washington.
I intend to reach a good conclusion, Sergio Marchionne told
reporters at a news conference in Zurich, adding that he saw no reason
for Fiat not to close by the deadline set by the U.S. government.
Washington has warned Chrysler, the smallest of Detroit's Big Three
car makers, that it would go into bankruptcy if it fails to complete an
agreement by April 30.
Marchionne told Canada's Globe and Mail newspaper in an interview
published on Wednesday that there was only a 50-50 chance of a deal
succeeding because of lack of progress in talks with union leaders.
Absolutely we are prepared to walk. There is no doubt in my mind,
Marchionne said in the interview, posted on the Globe and Mail website
However, the Fiat chief told the Zurich news conference: The
objective is to avoid Chapter 11. People would do it if necessary. Our
preference is to find a solution with U.S. Treasury, (unions) and
lenders that would allow for a smooth transition to a new Chrysler.
The deal with Chrysler was first announced in January but has been
modified as Chrysler continued its talks with the U.S. government aimed
at securing fresh funds.
In the latest version of the deal, Fiat would take an initial 20
percent stake in Chrysler in exchange for the technology to make small
cars and access to foreign markets.
OTHER ROUTES POSSIBLE
Marchionne, who has said Fiat cannot survive alone, said in Zurich that it was still looking for strategic partnerships.
If one road goes nowhere, we'll try another. We'll find something somehow. There are lots of plan Bs, he said.
We are looking at everything in terms of strategic alliances in
Europe, North America, everywhere. We answer the phone to everyone who
There has been persistent speculation that Fiat might opt for a deal
with France's PSA Peugeot-Citroen but the Italian car company has only
said it is examining various opportunities.
Fiat ended 2008 with 5.9 billion euros of industrial debt after
burning cash like other car makers who are struggling to shift
stockpiles as the global credit crunch stifles demand.
Government incentives have helped car sales in Italy and several
other European countries in the first quarter, although Marchionne
reiterated on Wednesday that the quarter was tough.
He said that Fiat's market share in Europe in March was around 9.2
percent, a step in the right direction. Fiat's share in Europe in
February was 9.1 percent.
If a deal goes through, Chrysler's first-lien lenders could offer to
take equity in a Chrysler-Fiat alliance and some cash in exchange for
abandoning their claim to some $7 billion in debt, sources with
knowledge of the matter said.
Marchionne said in Zurich he was ready to do what is needed to get Chrysler back to health.
He told the Globe and Mail that he would even consider becoming CEO of Chrysler.
Fundamentally, that's possible, but the title isn't important, Marchionne said.
He also told the Canadian newspaper that Chrysler unions had to
agree to match the lower labor costs of plants run by Japanese and
German carmakers in the United States and Canada, adding that Canadian
unions were especially resistant to the idea.
The Canadian Auto Workers Union said on Wednesday that it plans to
go back to the bargaining table with Chrysler on Monday, resuming talks
that have been stalled since the beginning of April.
Nomura analyst Michael Tyndall said Marchionne was probably not bluffing in talking tough with the unions.
He's playing hardball, Tyndall said, adding that the unions' position would make the deal too costly for Fiat.
We want them (Fiat) to walk away ... I don't see any benefits in this deal, he said.
Fiat shares closed up 2.63 percent at 7.02 euros. The DJ Stoxx auto index was down 0.97 percent.
U.S. private equity firm Cerberus Capital Management owns 80.1 percent of Chrysler and Germany's Daimler AG 19.1 percent.
(Editing by John Stonestreet and Karen Foster)