Fiat execs come to U.S. to hash out new Chrysler deal

An alliance between Italy's Fiat SpA and Chrysler LLC presents "an extraordinary opportunity," Fiat Chairman Luca Cordero di Montezemolo said Tuesday, adding he hoped an agreement would be concluded in the next few weeks.

Top Fiat SpA executives are in Detroit today as the clock ticks on the 30-day window for the Italian automaker and Chrysler to finalize a deal to form an alliance.

Chief Executive Officer Sergio Marchionne and Alfredo Altavilla, who oversees business development for Fiat, left Italy Monday night on a day that saw U.S. President Barack Obama and his auto task force announce their conclusion that Chrysler is not a viable company on its own.

The fate of Chrysler -- and the prospect of an additional $6 billion in federal loans -- depend on a partnership that would address some of Chrysler's shortcomings in product and market reach. Failure to do so likely would end in the liquidation of Chrysler, which has said it needs a bailout to survive and that Chapter 11 bankruptcy would quickly result in the more dire Chapter 7.

The task force also has changed the framework of the potential deal with Fiat. The initial memorandum of understanding called for Fiat to take an initial stake of 35 percent in a non-cash deal, which could grow to 55 percent.

The new starting point is 20 percent equity, said a source familiar with the situation. It would increase incrementally as a series of milestones are reached. For example, when the first Fiat engine is engineered for use in Chrysler vehicles in the U.S., Fiat's stake could be increased to 25 percent; completion of the first shared platform for vehicles for both companies would up the share again, as would the start of export of vehicles.

The source stressed it was not Fiat or Chrysler that mandated the changes, but the task force.

Marchionne said Monday he was comfortable with the changes. "We believe we will arrive at a result that will establish a credible future for this crucial industrial sector," he said in a statement.

In a statement issued by the chairman's office in Turin, di Montezemolo said: "If an agreement is concluded, as we hope, in the next few weeks, it will present an extraordinary opportunity. Having access to a major network such as Chrysler's, we will be able to enter the U.S. market with automobiles, which we are sure will be appreciated for their innovative content, style and advanced technology. Despite the difficult period it is currently experiencing, the U.S. market still remains the greatest opportunity and challenge."

Chrysler Chief Executive Robert Nardelli also applauded the task force findings. "By providing Chrysler with product and platforms, technology cooperation and global distribution, Fiat strengthens Chrysler's ability to create and preserve U.S. jobs; gives U.S. consumers more choices for environmentally advanced vehicles; gives its dealers more of the products they need to be successful; helps stabilize the supplier base; and allows Chrysler to pay back government loans sooner," Nardelli said in a statement.