The Feds forked over $6.6 billion by wire transfer today, giving Chrysler “exit financing” and allowing it to close with Fiat. This came after the Supreme Court lifted its stay last night on hearing the Indiana pension fund case, refusing to intervene. The case essentially wasn’t a big enough deal to engage the court, so it said. Chrysler-Fiat is now a fait accompli.
Fiat will have a 20 percent stake in the company, which will rise to 35 percent if fuel-efficiency goals are met. The UAW gets 55 percent; the U.S. government 8 percent; the Canadian government 2 percent. Fiat will assume its majority stake only after the new Chrysler pays back the Treasury loan of $15.5 billion.
Fiat spokesman Gualberto Ranieri said [Fiat CEO Sergio] Marchionne will retain the title of CEO of both Chrysler and Fiat. Former Vice Chairman Jim Press was promoted to deputy CEO and special advisor; he will be the point man for Chrysler’s restructuring.
The deal formed a new company, called Chrysler Group LLC, after the former Chrysler LLC sold nearly all of its assets to the new firm.
Back in Washington, the nation’s car capital, the House passed the gas guzzler trade-in bill by a big majority, 298 to 119. The CARS Act affects vehicles getting 18 mpg or worse. If you trade one of these for a car that gets on average 4 mpg more, you can qualify for a $3,500 voucher on the new car. If your new car gets 10 mpg more, you’ll get $4,500.
The bill has yet to pass the Senate, where there is some opposition, and then won’t take effect until 30 days after President Obama signs it—which means no money until at least August 1. Most observers think the bill will boost car sales, as a similar program did in Germany. It will cost $4 billion for one year, and no one has yet confirmed where the money’s coming from.
Will auto sales pick up before August? Will the Fiat alliance revive faith in Chrysler? Will the sun set tomorrow? Give us your thoughts.