Fiat and Chrysler preparing to vote a CEO for the merged company

Article by Christian Andrei, on August 26, 2010

It seems that the financial prospect of Chrysler is intrinsically linked with Fiat, and if the partnership pushes through between them then Chrysler may come out from the fiasco with the United Auto Workers union and Fiat as its two major shareholders.

If the partnership comes through the US government and Fiat would assign a new board of directors which would be independent and not connected with either Fiat or Chrysler at present.

Then, the new board of directors will vote a CEO for the merged company.

As part of the restructuring process the investments of Chrysler's existing shareholders, Cerberus Capital and Daimler AG, are expected to be discarded.

The United Auto Workers union would become a major shareholder in the new Chrysler if it consented to exchange half of the debt of the carmaker, which currently amounts to $10 billion, into equity. Fiat will initially own 20 percent of the new Chrysler.

Then will be allowed to grow this initial stake with a series of benchmark targets for the Fiat and Chrysler partnership.

The increases will consist of 25 percent equity when the first Fiat powerplant is certified for use in the US, 30 percent when the first Fiat-based vehicle enters production in the US and 35 percent when the first Fiat-based US vehicle hits export.

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