Fiat won't take on new debt to buy Chrysler stake: CEO

Fri Jun 7, 2013 8:40am EDT
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VENICE, Italy (Reuters) - Carmaker Fiat SpA FIA.MI does not need to take on any new debt to buy out the rest of Chrysler, Chief Executive Sergio Marchionne said on Friday, rebuffing concerns about the cost of the looming deal.

Fiat and its U.S. unit Chrysler, in which the Italian group has a 58.5 percent stake, have 21 billion euros ($27.7 billion)in liquidity that can also be used for acquisitions, Marchionne said.

The 41.5 percent Chrysler stake held by the auto workers' union healthcare trust fund VEBA could cost Fiat $3.5 billion, said Morgan Stanley in a research report on June 5.

Fiat is expected to buy the stake and then merge the two manufacturers to create the world's seventh-largest auto group by sales, but the final cost remains to be seen and there are questions about whether it will lead to a credit rating downgrade.

"We have no immediate need for financing, we will not take on any new debt," Marchionne told reporters at a conference in Venice. Asked about reports that Fiat was in refinancing talks with banks for $10 billion, Marchionne said: "No, that figure is incorrect."

Marchionne confirmed Fiat will soon conclude refinancing for a 1.95 billion euro revolving credit line. And he added that the automaker is in talks to refinance debt at Chrysler, without specifying the amount.

Banking sources have said Chrysler wants to refinance a $3 billion, six-year syndicated term loan that it took out in May 2011.

Marchionne has said in the past that Fiat may need to raise capital in connection with the Chrysler purchase.

Marchionne also on Friday reiterated Chrysler's resistance to a recall of 2.7 million older-model Jeep vehicles, adding that the automaker is preparing to supply the National Highway Traffic Safety Administration (NHTSA) with information it had requested.   Continued...

Fiat CEO Sergio Marchionne poses after the presentation of the new LaFerrari hybrid car on the Ferrari stand during the first media day of the 83rd Geneva Car Show at the Palexpo Arena in Geneva March 5, 2013. REUTERS/Denis Balibouse