- The Washington Times - Saturday, March 21, 2009

DETROIT | A public tiff between Italian automaker Fiat SpA and Chrysler LLC apparently ended Friday when Chrysler rescinded a statement on its Web site that Fiat would be responsible for part of Chrysler’s debt if the two companies join forces.

Chrysler, in a Web video Thursday explaining why an alliance for the two companies would be good for Chrysler and the country, said Fiat would be responsible for 35 percent of what Chrysler owed to the U.S. government.

But Fiat on Friday denied that it would be responsible for any of Chrysler’s debt.

The two companies are talking about an alliance in which Fiat would take a 35 percent stake in Chrysler in exchange for Fiat’s small-car technology.

Chrysler, in a statement Friday, reversed the claim it made on the Web site and said Fiat would become an equity holder.

“To clarify, this does not mean Fiat would assume responsibility for any of Chrysler LLC’s debt,” the company said.

Fiat Group said Friday that it “intends to make absolutely clear that the proposed alliance will not entail the assumption of any current or future indebtedness to Chrysler.”

Fiat shares dropped 2.3 percent to close at $6.25 in Milan, Italy.

The Chrysler video featured Chief Executive Officer Bob Nardelli saying the company can be viable on its own, but a deal with Fiat would enhance that viability. A narrator made the statement about Fiat being responsible for the Chrysler debt.

The video remained on Chrysler’s Web site Friday morning, but the part about Fiat assuming debt had been removed.

Fiat is discussing trading its small-car and small-engine technology for a 35 percent stake in Chrysler in a noncash deal. The agreement would help Chrysler bring urgently needed small cars to its showrooms while helping Fiat re-enter the American market with the Alfa Romeo brand and the update of the iconic Fiat 500.

A Fiat spokesman in Italy said Friday that negotiations with Chrysler were continuing.

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