- The Washington Times - Friday, March 20, 2009

MILAN (AP) - The Italian automaker Fiat said Friday that it won’t assume Chrysler LLC debt _ current or future _ in deal for a 35 percent stake, contradicting statements from Chrysler that it would.

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

By contrast, Chrysler said Thursday in a video posted on its Web site that the Italian automaker would be responsible for 35 percent of Chrysler’s debt to the U.S. government should a proposed alliance go through.

Fiat shares slipped 5.5 percent to euro4.43 ($6.01) on the Milan stock exchange early Friday on the Chrysler statement. After the Fiat statement, shares recovered to euro4.53 ($6.15).

The Chrysler video featured clips from CEO Bob Nardelli, who said 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 media Web site Friday morning. Messages were left for Chrysler spokeswomen seeking clarification.

Fiat is discussing trading its small-car and small-engine technology for a 35 percent stake in Chrysler in a non-cash deal. The agreement would help Chrysler bring badly 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.

Nardelli earlier this week said that Chrysler would get technology and other items worth $8 billion to $10 billion under the alliance _ a contribution Nardelli said would be equal to or greater than the loans Chrysler is seeking from the U.S. government.

In the video, Nardelli said Chrysler is considering using four Fiat car architectures as well as two engines and transmissions. Those architectures would be in the categories of micro, subcompact and compact cars, said Chrysler spokesman David Elshoff.

Also in the video, Chrysler said an alliance with Fiat would help it leapfrog five or six years ahead in development of fuel-efficient and clean-air technology.

Chrysler is working to meet the conditions of its $4 billion federal loan and prove it deserves to get the additional $5 billion it has requested.

Any deal with Fiat is contingent upon the company gaining U.S. government approval of its viability plan and the release of additional government loan money to Chrysler.

Fiat CEO Sergio Marchionne has testified on the deal before Obama administration’s auto industry task force.

___

AP Auto Writer Tom Krisher in Detroit contributed to this report.

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