Posted Nov 23rd 2012 9:00AM
Shares of Chrysler parent company Fiat SpA fell by 5.9 percent on Tuesday. Two European banks downgraded the company's stock, with UBS AG dropping the company's stock from a "buy" rating to "neutral." Likewise, Deutsche Bank cut the company's shares from "hold" to "sell" amid concerns that the company will need a new cash infusion to fund CEO Sergio Marchionne's plans for the automaker. Marchionne has made it clear he plans to purchase the remainder of Chrysler, which will require Fiat to raise somewhere between 1.6 billion and 2.9 billion euros (CAD$2.5 billion and 3.7 billion). That's due in part to the fact that the company may have to start paying fair-market value for Chrysler stock as the company's initial public offer grows near.
Bloomberg reports Marchionne is keen to increase the Fiat stake in Chrysler in order to access the profitable North American manufacturer's cash flow. Fiat could then use those funds to jump start its ailing European operations, though Marchionne has been quoted as saying Fiat doesn't need Chrysler's cash to bring its EU business in line. Last quarter, Fiat reported 20 billion euros of available liquidity, down from 22.7 billion euros (CAD$25.7 billion and 29.2 billion) at the end of June.
News Source: Bloomberg, The Detroit News
Image Credit: John Thys / AFP/Getty
FOLLOW AUTOBLOG CANADA
Follow us on FacebookFollow
Get updates from Autoblog Canada posted directly to your News Feed.