Marelli, key supplier, trying to turn around and dump debt

Just three years ago, Fiat Chrysler sold Fiat’s parts group, Magneti Marelli, to KKR-owned Calsonic Kansei Corporation’s CK Holdings. Fiat Chrysler—now Stellantis—remains a primary customer of (as it was now called) Marelli; as in the past, Marelli also sells to numerous other automakers.

Today, Bloomberg announced that Marelli has chosen a group to restructure its debt under the Japanese equivalent of Chapter 11 bankruptcy, which preserves the organization and keeps it operating. Unsurprisingly, Marelli chose to have its owner, KKR, “restructure” its debt. The group wants to drop 450 billion of its 1.1 trillion yen in debt, possibly converting some into equity—which could bring some of Marelli to Stellantis. (450 billion yen is around $3.5 billion.)

KKR itself is adding $650 million in new capital and writing off 200 billion yen in Marelli debt to itself.

Suppliers have been rocked by COVID based shortages which arrived as new investments in electrification were under way. In Marelli’s case, the acquisition’s timing could not have helped.

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