After several months of negotiations and uncertainty, the U.S. car manufacturers Chrysler and Italian Fiat have finally sealed their merger. According to both firms have announced the new company, renamed Chrysler Group LLC, will begin its operations immediately. In fact, the former Chrsyler has already transferred, and formally today, virtually all of its assets, except for debts and liabilities.
Also, Sergio Marchionne, CEO of Fiat, will assume the same responsibility in Chrysler LLC, which will have a board consisting of nine members. Of this total, three directors are appointed by Fiat, four by the United States Government, an adviser to determine what the Government of Canada and other UAW.
The Italian company ownership, output, 20% of capital may be increased to 35% under certain conditions. But “you can not achieve the majority of Chrysler’s capital until the liabilities of public funding are not fully settled,” the release of both companies, suggesting that “the new group today has the resources, technologies and networks distribution required (supplied by Fiat) to compete effectively worldwide. ”
“From the beginning we were determined to make this alliance a major step to solve the problems affecting the automotive industry. From now on we work on defining a new model for the auto companies that want to gain,” Marchionne says.
“The activity of taking the new Chrysler company, stop during this period are now or will be operational again soon, and has already begun work to develop greener cars, low consumption and high quality,” says the note public. This activity will focus on the brands Chrysler, Jeep, Dodge and Mopar, “each with full accountability for profit and loss.”
U.S. approval
The U.S. Supreme Court gave its green light to the acquisition of Chrysler by Fiat after it halted the transaction on Monday to study the lawsuit filed by some of the giant automobile bonistas. The news was greeted with relief in the U.S. government, which had all the meat on the grill with his full support for the agreement.
Thus, the company and its management passed into the hands of the Italian multinational. In addition, an investment fund owned by the union of Chrysler will have almost 70% of the new Chrysler, while the governments of USA and Canada will have 9.8% and 2.5% respectively.
“We are delighted with the fact that the Chrysler-Fiat alliance can go forward, allowing Chrysler to emerge again as an automaker competitive and viable” has been praised in a public statement the Treasury Department.
In its ruling, the Supreme Court rejected the argument of three pension funds from Indiana who had a claim to it that had not respected their rights as owners of secured debt of the giant automovilísitico.
Despite being secured debt-holders of what is normally granted preferential treatment in such situations, the agreement between the Government, unions and leaders of the two companies gives the pension fund only 29 cents for every dollar invested. This figure is significantly lower than that granted to other processes like bonistas in accordance with the laws of the country.
The decision of the Supreme had been anticipated by most observers and analysts, given the strong political dimension of the case. And the White House has been involved very directly in the process of bankruptcy and restructuring of Chrysler, so a decision contrary to their interests would have been a blow to Obama, and have also opened a schism between the executive and the judiciary.
In fact, it has lobbied the government to hedge funds hold a greater amount of secured debt to accept the harsh terms of the agreement. In addition to the enormous capacity to influence public supposed to have injected capital into large financial institutions in the country, the White House threatened to hedge funds to trigger a public campaign of vilification from his privileged pulpit.
If in addition to all this, we add that the three pension funds in Indiana, which belong mainly to public officials and police associations, have less than $ 50 million-some 35 million euros, with over 6,000 million secured debt of $ -4600 million euros, it was easy to conclude that the dispute was handled in the Supreme Court was a struggle between David and Goliath.
Do not forget that the absence of another potential buyer, if it had foiled an agreement with Fiat, would have been no alternative to liquidation of the company, which would mean the loss of tens of thousands of direct and indirect jobs.
