Fiat To Take On 35 Percent Of Chrysler Debt If Alliance Is Approved

Troubled US carmaker Chrysler announced today that if its merger with Fiat is approved by the US treasury – which would see Fiat take a 35 percent stake in Chrysler – the Italian manufacturer would also assume 35 percent of its debt.

Analysts have said that the move is likely to be Chrysler’s last shot at survival.

Chrysler has recently requested a further US$5 billion (AU$7.2b) in government aid on top of the US$4b it has already received, and if the extra aid is approved, Fiat would take on US$3.15b (AU$4.5b) in debt – a significant figure by any measure.

The deal would see some 5000 Chrysler workers saved from the immediate risk of unemployment and would be worth in the neighbourhood of US$10b (AU$14.5b) to the ailing Michigan manufacturer.

While the deal does not seem to present any obvious short-term benefits for Fiat, it would offer the company a lucrative future opportunity to badge its small cars as Chrysler models for the US market, or as an entrance for the Fiat badge itself into the US.

Fiat is itself seeking financial aid from the Italian government to prevent 60,000 job cuts.