Chrysler Group LLC and Fiat Finalize Global Strategic Alliance;
New Chrysler Emerges as a Stronger, More Competitive Global
Company
C. Robert Kidder to be named Chairman of U.S. Automaker
Sergio Marchionne to Serve as Chief Executive Officer
Auburn Hills, Mich. / Turin, Italy - Chrysler Group LLC and Fiat Group announced today that they have finalized their previously announced global strategic alliance, forming a "new" Chrysler that has the resources, technology and worldwide distribution network required to compete effectively on a global scale. The new Chrysler will begin operations immediately.
As part of the alliance, Fiat will contribute to Chrysler its
world-class technology, platforms and powertrains for small- and
medium-sized cars, allowing the company to offer an expanded
product line including environmentally friendly vehicles
increasingly in demand by consumers. Chrysler will also benefit
from Fiat's management expertise in business turnaround and access
to Fiat’s international distribution network with particular
focus on Latin America and Russia.
"This is a very significant day, not only for Chrysler and its
dedicated employees, who have persevered through a great deal of
uncertainty during the past year, but for the global automotive
industry as a whole," said Sergio Marchionne, who today was named
Chief Executive Officer of Chrysler Group LLC. "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. We now look forward to establishing a new
paradigm for how automotive companies can operate profitably going
forward."
Mr. Marchionne continued: "We 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."
The same attributes that first attracted us to this alliance
– a global automotive company with first-class technology, a
devoted workforce, improved efficiency, a strong, global
distribution network and an unyielding passion for building great
cars that consumers want – are even more true today. 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 automakers. This has, I know, been a difficult process for
everyone involved, but we are ready to prove to the American
consumer that Chrysler can once again be a strong, competitive
company that produces a full portfolio of reliable vehicles that
capture the imagination and inspire loyalty," Mr. Marchionne
said.
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 LLC today formally sold substantially all of its assets, without certain debts and liabilities, to a new company that will operate as Chrysler Group LLC.
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
has also 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, the United Auto Workers' Retiree Medical Benefits Trust,
a voluntary employees' beneficiary association trust (VEBA) 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. These
interests reflect the anticipated share dilution as a result of
Fiat's incremental equity assumption once the milestones outlined
in the strategic alliance agreement are achieved.
In addition to Mr. Marchionne, currently the Chief Executive
Officer of Fiat S.p.A. serving as CEO, the new Chrysler will be
managed by a nine-member Board of Directors, consisting of three
directors to be appointed by Fiat, four directors to be appointed
by the U.S. Government, one director to be appointed by the
Canadian Government and one director to be appointed by the United
Auto Workers' Retiree Medical Benefits Trust. The Board is expected
to name C. Robert Kidder as Chairman. The process of determining
additional board members is continuing and updates will be
announced as appropriate.
As previously announced, Chrysler has entered into an agreement
with GMAC Financial Services to provide automotive financing
products and services to the Company's North American (NAFTA)
dealers and customers. GMAC Financial Services will be the
preferred lender in North America for Chrysler, Jeep and Dodge
dealer and consumer business, including wholesale of new and used
vehicles as well as retail.
