“I don’t think there’s a 100 percent guarantee of the fact that there is an IPO,” said Marchionne at a recent event in Windsor, Ontario.

It increasingly appears that Marchionne is more interested in complete ownership of Chrysler by Fiat Group rather than just having a controlling stake. “Fiat is effectively in a position to buy the whole company,” says Max Warburton, a senior analyst at Bernstein Research in London. “The previous assumption was that Chrysler would make an IPO, but this now looks unlikely and a full takeover by Fiat Auto seems more probable.”

For the record, by the end of 2011 Fiat will have a 57% share of Chrysler.

Source: wcf

from Bloomberg.com:

Chrysler LLC may face an “impossible goal” in completing an alliance with Fiat SpA and meeting an Obama administration deadline to erase debt and win more union concessions by April 30.

Chrysler got its blueprint for the next month yesterday from President Barack Obama’s task force, which said that $6 billion in new aid hinges on “extinguishing the vast majority” of outstanding secured debt and new givebacks from the United Auto Workers.

Meeting those requirements would require help from lenders, which haven’t negotiated in the three months since Chrysler got its U.S. loans and have little incentive to do so because they would be paid off first in bankruptcy. Even Obama’s autos panel suggested Chrysler might fare better by reorganizing in court.

“It is an impossible goal,” said Sheldon Stone, a partner at Amherst Partners LLC, a restructuring firm in Birmingham, Michigan. “The likelihood is that the 30-day period is going to allow Chrysler to get their house in order for a bankruptcy.”

Fiat Chief Executive Officer Sergio Marchionne is in the U.S. today to talk about the Chrysler deal, a spokesman confirmed. Agence Presse-France reported the trip earlier.

‘Substantial Hurdles’

A Chrysler-Fiat combination would be the world’s sixth- largest by vehicle sales, behind Ford Motor Co. The companies said yesterday they have a framework for the alliance they agreed to in principle in January, while adding that “substantial hurdles” remain.

“Given the magnitude of the concessions needed, the most effective way for Chrysler to emerge from this restructuring with a fresh start may be by using an expedited bankruptcy process as a tool to extinguish liabilities,” Obama’s task force said.

Completing the Fiat deal is a precondition for loans beyond Chrysler’s first $4 billion, the task force said, which listed debt restructuring among six additional requirements. Chrysler, dependent on light trucks and on the North American market, can’t exist as a stand-alone company, Obama’s advisers said.

“I don’t really see how this is going to get resolved in the next 30 days,” said Stephen Spivey, an automotive analyst at Frost & Sullivan Inc. in San Antonio.

Fiat’s Holding

Fiat would take an initial holding of 20 percent in Chrysler, and ultimately would be limited to a 49 percent stake, a person familiar with the alliance plans said. The Turin, Italy-based automaker also has pledged to build Fiat-designed autos in the U.S., an administration official said on March 29.

Once the companies reach a final accord, they could develop a new business plan and then enter a government-orchestrated bankruptcy to eliminate Chrysler’s debts and re-emerge in as few as 30 days, the administration official said.

Obama’s task force didn’t spell out details of what it would expect in an expedited bankruptcy. In a restructuring plan submitted to the U.S. Treasury on Feb. 17, Chrysler said it expected an “orderly wind down” unless it were granted additional aid. The company didn’t refer to bankruptcy in a statement yesterday announcing the Fiat framework agreement.

“Chrysler is committed to working closely with Fiat, the administration, U.S. Treasury and the task force to secure the support of necessary stakeholders,” said CEO Robert Nardelli, who kept his job while the auto panel asked General Motors Corp. CEO Rick Wagoner to leave.

Working Together

Obama’s task force envisions Fiat and Chrysler to reach the necessary concessions with the UAW and bank lenders together, according to yesterday’s report.

Senator Bob Corker, a Tennessee Republican who has recommended bankruptcy for the GM and Chrysler, said he expects the government would support Chrysler’s use of court protection to force lenders to rework their debt agreements.

“In essence the company’s being given to Fiat,” Corker told reporters on a conference call.

Fiat rose 42 cents, 8.8 percent, to 5.2 euros at 3:44 p.m. in Milan trading. The stock fell 9.4 percent yesterday.

The Italian automaker’s original agreement called for acquiring 35 percent of Chrysler’s equity in exchange for sharing small-car technology. It would have had the option to increase its stake to 55 percent. Chrysler values the technology at between $8 billion and $10 billion.

While the paired companies may save costs to develop products, there’s no guarantee the small cars would make money, said analyst Maryann Keller of Maryann Keller & Associates in Stamford, Connecticut. Small-car profits are difficult to achieve in the U.S. because labor costs are the same as on larger vehicles while the prices are lower.

Chrysler’s Lenders

As of March 29, Chrysler hadn’t had any negotiations with its lenders, which include JPMorgan Chase & Co., Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley, people familiar with the company’s efforts said.

Bank lenders in a bankruptcy would be repaid their debts first from the sale of Chrysler’s assets. They must be convinced it’s better to take an ownership stake in Chrysler than to take their chances in recovering their cash through liquidation, Amherst Partners’ Stone said.

The lack of progress with the lenders also has held up Chrysler’s efforts to reach a deal with the UAW over the retiree health-care trust fund that is pivotal to reducing labor expenses. Chrysler wants the UAW to trade 50 percent of the $10.6 billion obligation to the fund for a stake in the company.

Chrysler already has a tentative agreement with the union to reduce labor expenses, bringing the automaker’s hourly costs closer to those at U.S. factories for Japanese manufacturers such as Toyota Motor Corp. That accord doesn’t go far enough, Obama’s task force has said.