Chrysler 2008 Annual Report Download - page 217

39. Subsequent events
The principal events that have occurred after the balance sheet date are as follows:
On 20 January 2009, Fiat S.p.A., Chrysler LLC (Chrysler) and Cerberus Capital Management L.P., the private investment majority
owner of Chrysler LLC, announced the signing of a non-binding term sheet for the establishment of a global strategic alliance.
According to the term sheet, the alliance, to be a key element of Chrysler’s viability plan, would provide Chrysler with access to
competitive, fuel-efficient vehicle platforms, powertrains, and components to be produced at Chrysler manufacturing sites. Fiat
would also provide distribution capabilities in key growth markets, as well as substantial cost-saving opportunities. In addition, Fiat
would provide management services, as required, in support of Chrysler’s submission of a viability plan to the U.S. Treasury. The
alliance would also allow Fiat Group and Chrysler to take advantage of each other's distribution networks and to fully optimize
their respective manufacturing footprints and global supplier bases. As consideration for the Group’s contribution of strategic
assets – consisting of product and platform sharing (including city and compact segment vehicles), technology sharing (including
fuel efficient and environmentally friendly powertrain technologies), and access to additional markets (including distribution for
Chrysler vehicles in markets outside of North America). Fiat would receive an initial 35 percent equity interest in Chrysler. The
alliance does not contemplate that Fiat would make a cash investment in Chrysler or commit to funding Chrysler in the future.
The proposed alliance would be consistent with the terms and conditions of the U.S. Treasury financing to Chrysler and completion
is subject to due diligence and regulatory approvals, including the approval of the U.S. Treasury.
On 27 January 2009, Magneti Marelli and SAIC Motor Corporation Ltd., through its subsidiary Shanghai Automobile Gear Works
(SAGW), signed a joint venture agreement in China for production of hydraulic components for the Freechoice™ Automated
Manual Transmission (AMT) made by Magneti Marelli. Under the agreement, Magneti Marelli and SAGW will take equal interests.
The joint venture will be located near Shanghai and is due to be operational in the second half of 2009. At full capacity, the new
entity will be capable of producing components for about 350,000 gearboxes a year.
During January 2009, the three leading credit rating agencies announced that they had placed Fiat’s long and short-term ratings
under review: Moody’s Investors Services placed the ratings under review with a possible downgrade; Standard & Poor’s Rating
Services placed them on CreditWatch with negative implications (together with the long-term rating for CNH Global N.V.) and Fitch
Ratings placed them on Rating Watch Negative.
13 February 2009
On behalf of the Board of Directors
/s/ LUCA CORDERO DI MONTEZEMOLO
Luca Cordero di Montezemolo
Chairman
Fiat Group Consolidated Financial Statements at 31 December 2008216