Chrysler LLC executives told employees Monday they believed technology the company would receive as part of its joint venture with Fiat Group SpA would be worth as much or more than the $9 billion it is seeking in government loans.
Cerberus Capital Management LP-owned Chrysler has a pending deal that would swap 35% of its equity in exchange for Fiat's engine and small-car expertise. That partnership, which is subject to Chrysler securing $5 billion in new government loans on top of the $4 billion it has already been granted, would be worth as much as $10 billion to the automaker, according to CEO Bob Nardelli (pictured).
"This is equal to or greater than the total amount of loans we have requested from the U.S. government," Nardelli wrote in an email to employees. "Even more importantly, Chrysler would save three to five years in development time, giving us a major competitive advantage."
While Nardelli's estimate could be argued, the underlying message of his email was clear. The executive noted that the Fiat partnership, like the government loans, is contingent on Chrysler securing concessions from stakeholders including creditors, dealers and its powerful United Auto Workers union.
Nardelli insisted that even without Fiat, Chrysler can survive. The executive said that during meetings with the task force assembled by President Barack Obama to assess the auto industry that "we have continued to emphasize that Chrysler is a viable business on a stand-alone basis and our future is further enhanced through the proposed global alliance with Fiat."
Chrysler has until the end of the month to secure needed concessions and submit a final viability plan to government officials. --
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