MILAN, Jan 11, 2011 – Italian auto giant Fiat has enough capital to increase its stake in Chrysler to 51 percent, the company\’s president John Elkann said in an interview in the daily Corriere della Sera on Tuesday.
"We have already marked out in Fiat\’s balance sheet the necessary funds to buy the stake in Chrysler," Elkann said.
On Monday, Fiat increased its stake in Chrysler to 25 percent from 20 percent as part of a deal signed after the iconic US brand emerged from bankruptcy in 2009 and it has an option to boost the stake to 51 percent.
The five-percent increase was made possible after Chrysler announced that it would begin production of new Fiat-designed Fully Integrated Robotized Engines (FIREs) at the US company\’s plant in Dundee in the state of Michigan.
The deal foresees a further increase of up to 35 percent once Chrysler has fulfilled certain conditions based on sales outside the US, Canada and Mexico and the production of a fuel-efficient Fiat model in the United States.
Chrysler is now 63.5-percent owned by the UAW union, with Fiat holding 25 percent, the US Treasury 9.2 percent and the Canadian government 2.3 percent.
Fiat will not have to pay anything to raise its stake to 35 percent, but will instead share its technology with Chrysler.
The Italian automaker has the option to buy an extra 16 percent in the company once loans from the US Treasury have been repaid.
Elkann said Fiat will not be selling assets in order to finance an increase in its stake in Chrysler.