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AS a result of the comprehensive restructuring plan Chrysler has reached an agreement in principle to establish a global strategic alliance with Fiat to form a new company.
It will allow US-based Chrysler and Italian giant Fiat to fully optimise their respective manufacturing footprints and the global supplier base, while providing each with access to additional markets. Fiat powertrains and components will also be produced at Chrysler manufacturing sites.
US President Barrack Obama said: "It's a partnership that will save more than 30,000 jobs at Chrysler, and tens of thousands of jobs at suppliers, dealers and other businesses that rely on this company."
He added that he was supporting Chrysler's plans to use US bankruptcy laws to clear away its remaining obligations so the company can get back on its feet and 'onto a path of success'.
As part of the agreement, every dime of new taxpayer money will be repaid before Fiat can take a majority ownership stake in Chrysler. In addition, considering Chrysler's extensive operations in Canada, the government of Canada is also committing resources to ensure that the new company has a chance to succeed.
Chrysler initiated discussions with Fiat more than a year ago to develop plans for a global product alliance. Over the past several months, these discussions have evolved and expanded.
Chrysler and many of its stakeholders worked tirelessly to agree upon concessions that will result in a significantly lower cost base and enable fulfilment of a broader strategic alliance.
Fiat will initially hold a 20 per cent ownership stake in Chrysler and will have the right to increase its ownership stake an additional 15 per cent in three increments as it meets certain criteria.
