Italy's Fiat is the new owner of the bulk of Chrysler's assets, closing a deal Wednesday that saves the troubled U.S. automaker from liquidation and places a new company in the hands of Fiat's CEO.
The deal clears the way for a new, leaner Chrysler Group to emerge from bankruptcy protection minus billions in debt, 789 underperforming dealerships and burdensome labor costs that nearly sank the storied automaker.
Fiat CEO Sergio Marchionne immediately was named CEO of the company, which said in a statement that it would soon reopen Chrysler factories that were idled during the bankruptcy process, costing the automaker $100 million per day.
The company will focus on smaller vehicles, areas in which Chrysler was weak.
"Work is already underway on developing new environmentally friendly, fuel-efficient, high-quality vehicles that we intend to become Chrysler's hallmark going forward," the company said in a statement.
The Italian automaker won't put any money into the deal but will give Chrysler billions worth of small car and engine technology.
"We intend to build on Chrysler's culture of innovation and Fiat's complementary technology and expertise to expand Chrysler's product portfolio both in North America and overseas," Marchionne said in a statement.
The sale to Fiat marks a victory for the Obama administration, which shepherded Chrysler into Chapter 11 protection on April 30 with the hope that the company would emerge in a matter of months with a new partner.
Marchionne immediately made management changes, including the appointment of Vice Chairman and President Jim Press as deputy CEO and adviser to help with the management transition.
Press, formerly Toyota's top U.S. executive, joined Chrysler shortly after it was taken over in 2007 by private equity firm Cerberus Capital Management.
In a statement, Marchionne said the organization will be designed to give leaders broad control and increase the speed of decision making.
Chrysler CEO Bob Nardelli bid employees farewell in an e-mail obtained by the Associated Press, while Vice Chairman Tom LaSorda already has retired.
Marchionne, in an e-mail to Chrysler employees Wednesday, expressed confidence that Fiat will be able to turn Chrysler around.
He wrote that he stepped into a similar situation five years ago at Fiat, which at the time was perceived as a failing, bureaucratic automaker that made low-quality cars. Yet most of the people capable of remaking Fiat were there all the time, he wrote.
"We have remade Fiat into a profitable company that produces some of the most popular, reliable and environmentally friendly cars in the world," he wrote. "We created a far more efficient company while investing heavily in our technologies and platforms. And, importantly, we created a culture where everyone is expected to lead. We can and will accomplish the same results here."
On Tuesday, Chrysler won its battle to erase its secured debt after the Supreme Court declined to rule on objections to the sale to Fiat from Indiana pension and construction funds. The Indiana funds, which hold less than 1% of Chrysler's $6.9 billion in secured debt, said the sale unfairly favors Chrysler's unsecured stakeholders such as the union ahead of secured debtholders like themselves.
Supreme Court Justice Ruth Bader Ginsburg decided Monday to delay the sale while studying the appeals. But on Tuesday, the court turned down the opponents' last-ditch bid by declining a hearing on the appeals.