Fiat Closes Deal to Purchase Chrysler, Sergio Marchionne Named New CEO

Fiat SpA closed a deal to purchase the majority share of Chrysler on Wednesday after months of negotiation.

The new company named Chrysler Group LLC will now move forward towards its reorganization after shedding billions of dollars in debt and 789 dealerships.

Fiat CEO Sergio Marchionne was named the new CEO of Chrysler. Marchionne said that the automaker will reopen Chrysler's idle factories, which cost the automaker $100 million a day. The company will now focus on making smaller vehicles.

"This morning's closing represents a proud moment in Chrysler's storied history," said the Treasury Department in a written statement. "The Chrysler-Fiat Alliance has now exited the bankruptcy process and is poised to emerge as a competitive, viable automaker."

The government will loan the new company $4.7 billion, to be repaid within eight years along with interest and $288 million in fees. The Treasury had given Chrysler LLC $3.3 billion in debtor-in-possession financing to support the company throughout the bankruptcy process.

Marchionne quickly appointed Jim Press as deputy CEO and adviser to help with the management transition.

Press, formerly Toyota Motor Corp.'s top U.S. executive, joined the old Chrysler shortly after it was purchased in 2007 by private equity firm Cerberus Capital Management LP. Press had been vice chairman and president of the old Chrysler.

Richard Palmer, who was previously CFO for Fiat Group Automobiles, will replace current Chief Financial Officer Ron Kolka. Kolka will head the wind down of the old Chrysler.

Chrysler Group will be divided into four divisions, representing the Chrysler, Jeep, Dodge, and Mopar brands. Peter Fong will become president and CEO of Chrysler brand.

Michael Manley will become president and CEO of the Jeep brand and Michael Accavitti will assume the same position for Dodge. Fiat's Pietro Gorlier will run the Mopar division.

Scott Kunselman will replace Frank Klegon as senior vice president of engineering. Klegon has said he will retire.

On Tuesday, a bankruptcy court judge approved Chrysler's decision to close 789 dealerships, which is 25 percent of Chrysler's dealer base.

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