Saturday, May 22, 2010

Chrysler considers stock sale next year

TORONTO — Chrysler Group LLC is considering a public stock offering sometime in 2011, the automaker's new CEO says.
Sergio Marchionne, who also heads Italy's Fiat Group SpA, said Thursday there is enough demand in the marketplace to support initial public offerings for Chrysler and General Motors Co., both of which were restructured in government-funded bankruptcy protection cases last year.

He also said Chrysler struggled through a painful restructuring last year, and he never wants to see the company lose money again.

"I expect 2010 will be a much better year than we originally forecast," he said, predicting that U.S. vehicle sales will top 11 million this year and 12 million in 2011.

"Those are good volumes to try and build a car business on," he told reporters before a business speech in Toronto.

Sales slumped to 10.4 million last year, the worst in more than a quarter century.

Chrysler would have been sold off in pieces in late 2008 or early 2009 if the U.S. government had not stepped in with billions in aid. The government put Marchionne in charge of turning around the Auburn Hills, Mich., automaker and gave Fiat a 20 percent stake in the company.

That can grow to 35 percent if it meets targets set by the U.S. Treasury. The remainder of the company is 68 percent owned by a United Auto Workers retiree health-care trust, 10 percent by the U.S. government and just over 2 percent by the Canadian government.

Actions have slashed flow of red ink

In its most recent quarter, Chrysler slashed its net loss to $197 million on cost cuts, manufacturing efficiency and more disciplined pricing.

That was far less than the staggering $3.8 billion the company lost from the time it left bankruptcy protection June 10 through the end of last year. Marchionne said Chrysler's turnaround plans are starting to work.

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