MILAN (Reuters) -- Fiat rebutted a report that it was set to raise money to finance its purchase of a further stake in Chrysler, saying it had no need for extra funds.
Its comment came after an unsourced report in Il Messaggero said Fiat was sounding out UniCredit, Morgan Stanley, Bank of America and Goldman Sachs about the possibility of raising between 1 and 2 billion euros ($1.3-$2.6 billion).
"Fiat states there is no specific project in such respect, and believes that there is no need for a capital increase," the company said in a statement today.
The situation is important for Fiat, whose CEO Sergio Marchionne is determined to gain full control of Chrysler by buying the remaining 41.5 percent stake from VEBA, a union trust.
This would allow the Italian company to restructure debt, boost earnings and support its struggling European operations until the economy recovers.
Chrysler is worth between $9 billion and $13.4 billion, UBS estimated in November, meaning the 41.5 percent stake would be worth between $4.1 billion and $5.5 billion.
VEBA took the stake in Chrysler during the carmaker's U.S.-government-led restructuring in 2009, and is seeking to maximize the value of its Chrysler stake.
Fiat said on October 31 it had 9.8 billion euros in liquidity, and Chrysler had 10.2 billion euros. It needs a liquidity cushion to maintain its credit rating. Moody's cut Fiat's credit rating to Ba3 with a negative outlook in October.
Court case eyed
In the meantime, Fiat and VEBA are locked in a dispute in a Delaware court over the price Fiat will pay for a further 16.4 percent of Chrysler over the next three years. The price was determined by a formula called the VEBA Call Option worked out in 2009, when Chrysler was exiting bankruptcy.
The Delaware court will decide whether Fiat must pay up to $1.7 billion as demanded by VEBA for the stake. Fiat says the stake is worth about half that price.