Fiat Mulls Loan to Fund Chrysler Purchase

Fiat SpA is discussing with its banks the possibility of a loan to help finance the acquisition of the 41.5% of Chrysler Group LLC that it doesn't already own, according to Bloomberg News.

The news service cites anonymous sources who say bankers are urging Fiat to raise €1.5 billion ($2 billion) of fresh capital to bolster its balance sheet, fund the restructuring of its European operations and buy Chrysler. Among the Italian carmaker's options: a bridge loan, asset sales or issue of new shares.

But Fiat-Chrysler CEO Sergio Marchionne reiterated at an investor conference last week that Fiat isn't planning such steps to boost capital because it has enough liquidity to cover all its needs, Bloomberg reports. The company had €9.1 billion ($12.2 billion) in cash and nearly €2 billion ($2.6 billion) in untapped credit lines on Dec. 31.

Fiat will need about €2.3 billion ($3.1 billion) to buy the rest of Chrysler, Goldman Sachs Group estimates. In October Fiat sued the union-run retiree healthcare trust that owns the 41.5% stake to resolve their dispute about the value of those shares.

Marchionne, who previously predicted the court would decide by the end of 2012, now says he expects a ruling by the end of next month. Marchionne aims to complete the Chrysler acquisition by the end of next year.