What does Fiat mean for Chrysler?
The gist is that for Chrysler to continue existing, it must either have its lenders forgo the debt or find a benefactor to lend more money. Hedge funds are unable to let go of what Chrysler owes them and Cerberus, the company that owns most of Chrysler is unlikely to send more money on it, it seems Chrysler is headed for bankruptcy.
Don’t Blame The AUW. If in the past, it was fashionable to shoot the auto union labor, this time they have agreed to take cuts, as have their banks creditors. The only problem was that hedge funds that had invested in Chrysler were unable to cut their lost. Given the ultimate solution, they will lose more which will benefit the Fiat Chrysler merger down the line, according to the OttawaCitizen. The deal will be signed tomorrow.
Good For Fiat, But Good For U.S. Taxpayers? And there lies the other point, if this helps out Fiat, what does this do for the U.S. taxpayers that have already sunk billion in the bleeding car maker? According to Seeking Alpha’s Robert Salomon, not too good. However, bankruptcy is the only threat that can get all parties to agree, if it isn’t too late.
Keeping To The Essential. But concretely, what does this mean for us all? Mostly, Chrysler will have access to Fiat’s technology, namely, small fuel efficient car platform. What will we most likely see in the U.S. roads in a few years? An electric Fiat 500? An electric Alfa Romeo? All guesses are good at this stage.
Source: Seeking Alpha, Wall Street Journal.
