A long tour in Detroit

30 April 2009 By Robert Cyran Follow @rob_cyran

The Italian car maker has pulled off a remarkable coup. In exchange for noncash bits and bobs, it has secured a path to control the US car company after its bankruptcy. But running a sprawling car maker is difficult just ask Renault s Carlos Ghosn.

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Fiat has signed a deal with Chrysler. The Italian car maker will receive a 20% stake of Chrysler post bankruptcy. Fiat will receive an additional 15% if it meets benchmarks such as: achievement of regulatory approvals to produce the FIRE family of engines in the USA; achievement of sales of Chrysler vehicles outside NAFTA, and achievement of regulatory approval to produce a Chrysler model based on Fiat technology. Fiat will also receive an option to buy another 16% stake that is exercisable from January 2013 to June 2016. However, Fiat cannot take its stake above 49% without fully repaying US government loans to Chrysler.

In exchange, Fiat will give Chrysler: licenses to produce its cars; engine technology; managerial expertise; and access to Fiat's distribution network outside the United States.

The US government will provide up to $3.5bn in debtorinpossession financing and up to $4.5bn in financing to help Chrysler exit bankruptcy.

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