Accessibility/Mobile Features
Skip Navigation
Skip to Content
Editorial News
Business
Classified Sites

The Canadian Press - ONLINE EDITION

Fiat shares lower on doubts about capital structure of Fiat Chrysler Automobiles ambitions

MILAN - Fiat shares sank more than 11 per cent Wednesday as investors expressed skepticism over a new business plan to launch Fiat Chrysler Automobiles as a leading global player.

Analysts said that the ambitious plan to invest 48 billion euros ($67 billion) to boost volumes to 7 million by 2018 from 4.4 million last year failed to adequately address the financing requirements. The plan does not include a capital increase, and the company left its options open, including the possibility of a convertible bond.

CEO Sergio Marchionne emphasized that cash-generating Ferrari was not for sale — a topic of frequent market speculation — and that an initial public offering was not imminent.

Bernstein analyst Max Warburton said Fiat's first-quarter results, which showed losses widening, "provided a sobering reminder of the fragile foundations on which FCA must build its ambitious plans."

Expressing reservations over business plan, Warburton noted that Fiat "is weighed down with huge debt, burdened by financing costs and is only thinly profitable."

Meanwhile, Mediobanca analyst Massimo Vecchio called the plan "challenging but achievable" and said he expected clarification on the capital structure after the new company is listed in New York and Milan, expected by Oct. 1.

Vecchio said Marchionne made clear a capital increase "would be prudent" but any decision to pursue one through a corporate bond issue was complicated by the company's stock performance, which the CEO said was undervalued.

Fiat shares, which had gained more than 40 per cent since Fiat announced the deal Jan. 1 to take full control of Chrysler, closed Wednesday at 7.48 euros.

  • Rate this Rate This Star Icon
  • This article has not yet been rated.
  • We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high. If you thought it was well written, do the same. If it doesn’t meet your standards, mark it accordingly.

    You can also register and/or login to the site and join the conversation by leaving a comment.

    Rate it yourself by rolling over the stars and clicking when you reach your desired rating. We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high.

Sort by: Newest to Oldest | Oldest to Newest | Most Popular 0 Commentscomment icon

You can comment on most stories on brandonsun.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

There are no comments at the moment. Be the first to post a comment below.

Post Your Commentcomment icon

Comment
  • You have characters left

The Brandon Sun does not necessarily endorse any of the views posted. Comments are moderated before publication. By submitting your comment, you agree to our Terms and Conditions. New to commenting? Check out our Frequently Asked Questions.

letters

Make text: Larger | Smaller

Brandon Sun Business Directory
Sudden Surge: Flood of 2014
Opportunity Magazine — The Bakken
Why Not Minot?
Welcome to Winnipeg

Social Media

Canadian Mortgage Rates