TURIN, Italy -- Fiat S.p.A.s equity stake in Chrysler LLC would be allowed to increase in blocks of 5 percentage points as the Italian automaker reaches certain benchmarks in bringing technology to its potential U.S. partner.
A person familiar with the Fiat-Chrysler negotiations reiterated earlier reports that Fiats initial stake would be 20 percent if the companies complete an alliance.
Fiat then would be allowed to boost that share to 35 percent in stages as platform and powertrain technologies are transferred to the United States, the person said. The increases would occur under these terms:
25 percent, when the first Fiat engine is certified for use in the United States.
30 percent, when U.S. production of the first Fiat-based vehicle begins.
35 percent, when the first U.S.-built vehicle based on Fiat technologies is exported.
When the alliance was announced in January, Fiat and Chrysler agreed to an initial Fiat share of 35 percent with the potential of an increase to 55 percent.
But the U.S. task force overseeing the bailouts of General Motors and Chrysler asked the Italian automaker to take a reduced stake from the outset. And before Fiat can increase its share to 55 percent, Chrysler has to pay back its U.S. government bailout money.
As part of the proposed alliance, Chrysler will get access to Fiats small-car technology.
In a statement, Chrysler noted that the original nonbinding agreement between the two automakers has been revised, as mentioned by President Barack Obama on March 30.
Fiat could not be recognized as a majority owner until after any loan is completely repaid, said the statement. The next step is to negotiate and enter into a binding agreement
So far, Chrysler has received $4 billion in U.S. loans. If Chrysler and Fiat can complete their alliance in time, the Obama administration has said it will consider an additional $6 billion in aid.
On March 30, the U.S. government gave Chrysler and Fiat 30 days to:
Reduce Chryslers debt burden to a sustainable level.
Negotiate additional concessions from the UAW.
Demonstrate with a greater degree of detail a plan that is truly viable and that can credibly repay taxpayer loans.
Confirm that $6 billion of post-restructuring loans from the U.S. Treasury Department would be sufficient.
Fiat and Chrysler have continued to negotiate terms of the alliance under the government deadline.
There are good chances the deal could be sealed before the end of the April deadline, the person familiar with the talks said.
Fiat declined to comment on details, reiterating that our executive team is working at full speed in the effort to meet the requests set by the presidents automotive task force on March 30.
A company spokesman confirmed that Alfredo Altavilla flew to the United States today for a new round of talks with Chrysler and the auto task force.
Altavilla, CEO of the Fiat Powertrain Technologies subsidiary and vice president for business development at Fiat Group Automobiles, spent most of last week in the United States with Fiat CEO Sergio Marchionne.
Marchionne and Altavilla met with Chrysler executives, the auto task force, the UAW and Chrysler lenders. It remains unclear how much, if any, progress has been made with the UAW or the lenders.
Reuters contributed to this report