Chrysler executives said Monday afternoon they have reached a tentative agreement with Italian automaker Fiat, just hours after President Obama gave the company 30 days to close the deal.
“We are pleased that Chrysler, Fiat and Cerberus have reached agreement on a framework of a global alliance, supported by the U.S. Treasury,” the company said in a statement on its Web site. “Chrysler has consistently said that the alliance with Fiat enhances its business model that expands its global competitiveness. We appreciate the willingness of the [Obama administration’s] Task Force, along with industry and financial experts, to consult closely with us in order to achieve this significant step.”
Cerberus Capital Management is a principal owner of Chrysler.
Chrysler spokesman Todd Goyer could not say when the deal would be made final.
“Right now we are working to secure the support of all the stateholders over the next 30 days,” Mr. Goyer said.
Fiat could not be reached for comment.
Mr. Obama said at an 11 a.m. press conference his administration had determined Chrysler cannot survive as a stand-alone company and must reach a deal by April 30 with Fiat.
“It is with deep reluctance but also a clear-eyed recognition of the facts that we have determined, after a careful review, that Chrysler needs a partner to remain viable,” he said.
Mr. Obama also said Chrysler would receive “adequate capital” before the 30-day deadline to continue operating.
The assistance to Chrysler was part of the president’s large plan to save the company and General Motors Corp., two of the Big Three in the struggling U.S. auto industry. However, the taxpayer money would be available only if the companies met clear deadlines and guidelines, he said.
Mr. Obama said he would give GM adequate working capital over the next 60 days. He said over that period, the administration will work closely with the company to produce a better business plan, which will include potentially consolidating unprofitable brands and riding itself of bad debt.
“We cannot, we must not let our auto industry simply vanish,” he said.
The restructuring began Sunday, with the administration forcing longtime the resignation of GM Chief Executive Officer Rick Wagoner and replacing him Fritz Henderson, the company’s chief operating officer.
The two companies received a combined $17.4 billion in loans from the Treasury Department’s $700 billion bailout fund at the end of last year.
GM received $13.4 billion in taxpayer money. Chrysler received $4 billion.
Ford Motor Co., the third of Detroit’s Big Three, also is suffering from the economic recession and collapsing auto sales but has not asked for loans. The company was in a much better financial state than GM and Chrysler when the auto industry faltered amid a year of $4-a-gallon gasoline and a monumental credit crunch.
Mr. Obama said responsibility for the failure goes from Detroit to Washington.
“I want to personally assure all of our customers, dealers, suppliers and employees that Chrysler will operate ’business as usual’ over the next 30 days,” the statement also said. “While we recognize that we still have substantial hurdles to resolve, Chrysler is committed to working closely with Fiat, the Administration, U.S. Treasury and the Task Force to secure the support of necessary stakeholders. If successful, the government will consider investing up to the additional $6 billion requested by Chrysler to help this partnership succeed.”
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