Report: Fiat Already In Buyer's Remorse Over Chrysler?

May 25, 2009

Fiat has shown the first signs that its alliance deal with Chrysler may not be all that it had hoped for, revealing late Friday that it has some concerns and that any further delays may jeopardize the whole deal. In a filing submitted by Fiat to the U.S. District Court in Manhattan to reject a request by a group of pension funds wanting to postpone the sale of Chrysler's assets, the Italian auto giant said that it is "already concerned" about the "deteriorating value" of the assets.

Fiat also warned that the any delays of the asset sales will “destroy Chrysler, put hundreds of thousands of people out of work, and devastate communities in both the United States and Canada.” Chrysler has been given until June 15 to complete its deal with Fiat and transform itself into the ‘New Chrysler’, which along with Fiat will be owned by the U.S. and Canadian governments, and the UAW.

While executives and legal teams battle it out in court, Chrysler’s plant shutdowns across the country are having disastrous affects on supplier and dealer networks, which in turn are leading to the deterioration in the value of Chrysler’s few remaining good assets. In a worst case scenario, Chrysler will be forced into liquidation but this is an outcome that all parties involved are hoping to avoid as it would make it more difficult to recover funds.

[Reuters]

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