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Fiat Now Targeting 46% Chrysler Stake

Move requires paying off most of the government bailout.

by on Apr.15, 2011

Fiat may soon up its stake to 46%.

Just days after boosting its stake in Chrysler to 30%, Fiat is preparing for another big increase – though to get to 46%, it will have to pay off or refinance a large chunk of the money loaned to the U.S. maker as part of its 2009 bankruptcy bailout.

With Chrysler’s balance sheet still in the red there seems little likelihood it will come up with the case on its own, and Sergio Marchionne, CEO of both Chrysler and Fiat, has indicated he is now talking with a variety of lenders who could step in and help refinance the money owed to the U.S. and Canadian governments.

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The Italian executive has complained that Chrysler is paying too high an interest rate on the bailout loans, so switching to a new lender could improve the maker’s finances, as well as permit Fiat to take a larger stake.

But there is little doubt that Marchionne wants to increase Fiat’s holdings as soon as possible, suggested the Italian newspaper Corriere della Sera.  “He wants to do it by June,” the paper reported Thursday.  “He might be able to do it sooner.”