AUBURN HILLS, Mich. (June 10, 2009)—Chrysler L.L.C. and Fiat Group have finalized their global strategic alliance, forming a “new” Chrysler that will hit the ground running with the “resources, technology and worldwide distribution network required to compete effectively on a global scale.”
The name of the new company, which will be based in Auburn Hills and will begin operations immediately, is Chrysler Group L.L.C.
“From the very beginning, we have been adamant that this alliance must be a constructive and important step towards solving the problems impacting our industry,” said Sergio Marchionne, currently the CEO of Fiat S.p.A. who has been named CEO of Chrysler Group. “We now look forward to establishing a new paradigm for how automotive companies can operate profitably going forward.”
Marchionne said the two car companies “intend to build on Chrysler's culture of innovation and Fiat's complementary technology and expertise to expand Chrysler's product portfolio both in North America and overseas. Those Chrysler operations assumed by the new company that were idled during this process will soon be back up and running, and work is already underway on developing new environmentally friendly, fuel-efficient, high-quality vehicles that we intend to become Chrysler's hallmark going forward.”
He said that while it does not solve every issue faced by the automotive industry today, this alliance, established with the full support of President Obama's Administration, is a very significant step toward positioning Fiat and Chrysler to be leaders among the next breed of global auto makers.
Under the terms approved by the U.S. Bankruptcy Court in New York and various regulatory and antitrust regulators, the company formerly known as Chrysler L.L.C. today formally sold substantially all of its assets, without certain debts and liabilities, to the new Chrysler Group.
Chrysler Group, in turn, issued to a subsidiary of Fiat a 20-percent equity interest on a fully diluted basis in the new company. Fiat also has entered into a series of agreements necessary to transfer certain technology, platforms and powertrains to the new Chrysler. Fiat's equity interest will increase in increments by up to a total of 35 percent in the event that certain milestones mandated by the agreement are achieved, but Fiat cannot obtain a majority stake in Chrysler until all taxpayer funds are repaid.
Similarly, Chrysler said the United Auto Workers' Retiree Medical Benefits Trust—has been issued an equity interest in Chrysler Group equal to 55 percent on a fully diluted basis. The U.S. Treasury and the Canadian Government have been issued an equity interest equal to 8 percent and 2 percent on a fully diluted basis, respectively.