Chrysler Files for Initial Public Offering - Dodge Nitro Forum
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post #1 of 3 (permalink) Old 09-23-2013, 04:29 PM Thread Starter
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Exclamation Chrysler Files for Initial Public Offering

Chrysler Group LLC Files Registration Statement for Proposed Initial Public Offering

September 23, 2013 , Auburn Hills, Mich. -

Chrysler Group LLC announced today that it has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission (the "SEC") relating to a proposed initial public offering of common shares. The number of shares to be offered and the price range for the offering have not yet been determined. The common shares to be sold in this offering are proposed to be sold by the UAW Retiree Medical Benefits Trust (the "VEBA Trust"), which has exercised demand registration rights under a shareholders' agreement with Chrysler Group LLC. The VEBA Trust will receive all of the net proceeds from this offering.

J.P. Morgan Securities LLC will be the lead book-running manager of the offering. This offering will be made only by means of a prospectus. A copy of the preliminary prospectus, when available, may be obtained by contacting J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York 11717, or by calling (866) 803-9204.

A registration statement relating to these securities has been filed with the SEC but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. Copies of the registration statement can be accessed through the SEC's website. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

CONTACT: Shawn Morgan, (248) 512-2692 (office), (248) 760-2621 (cell), [email protected]; or Katie Merx, (248) 512-4819 (office), (248) 202-3211 (cell), [email protected]

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post #2 of 3 (permalink) Old 09-25-2013, 05:39 AM Thread Starter
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Chrysler's largest stakeholder upset after Union push for IPO

09/25/2013



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After Chrysler's bankruptcy, the United Auto Workers union ended up owning a large stake in the company. Chrysler's largest shareholder, Fiat of Italy, wants the union's stake, but they're arguing over money. Representatives for the union have now filed papers to sell the union's stake to the public in an intial public offering and Fiat is not too pleased about the action.

Micheline Maynard, Forbes contributor, says the UAW is filing for an IPO as a bargaining tactic.

"I think this is a way to let the markets set the price on Chrysler. It's a big gamble though," she says.


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post #3 of 3 (permalink) Old 09-25-2013, 05:44 AM Thread Starter
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Fight over value of Chrysler shares could cost jobs


Sep 25, 2013

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The UAW-Fiat dispute over the value of the union health care trust’s 41.5 per cent stake in Chrysler has the potential to hinder the automaker’s turnaround and ultimately cost jobs in Canada and the United States, say industry experts.

“These two sides need to reach an agreement for their mutual benefit,” Richard Hilgert, a Morningstar Investment Research analyst who watches the auto industry, said Tuesday. “Chrysler and Fiat have to be combined as one entity across the Atlantic so it can be a globally healthy competitor, otherwise it would be to the detriment of both sides.”
Details of Chrysler's filing

Chrysler Group filed a 396-page document Monday with the U.S. Securities and Exchange Commission. Here are some of the details:

* Chrysler’s defined benefit pension plans are currently underfunded. “At the end of 2012, our defined benefit pension plans were underfunded by approximately $8.9 billion. “
* Chrysler plans to reduce the number of passenger car and SUV platforms from 11 in 2010 to nine by the end of 2014.
* In 2012, approximately 90 per cent of Chrysler’s vehicle sales were to customers in the U.S., Canada and Mexico.
* Chrysler’s principal competitors include General Motors, Ford Motor and Toyota.
* Chrysler’s total debt, as of June 30, 2013, was $13.7 billion.
* Chrysler’s collective bargaining agreements with the UAW and Unifor (formerly CAW) limits “our ability to modify our operations and reduce costs in response to market conditions.”
* Chrysler is “currently is seeking to hire employees in a number of critical areas, including vehicle design and engineering.”
* In the first six months ending June 30, 2013, Chrysler sold 119,000 minivans in the U.S. compared to 127,000 during the same period last year. Overall minivan sales decreased to 286,000 during the first six months of this year compared to 303,000. Chrysler has maintained about 41 per cent of the U.S. minivan market.

Chrysler Group on Monday filed for an initial public offering in the U.S. after it failed to reach an agreement on the value of the stock owned by the UAW’s Voluntary Employees’ Beneficiary Association fund, which pays for and administers retirees health benefits.

“An IPO is another part of a strategy of brinkmanship going on between the UAW and Fiat,” said Hilgert. “It makes a lot more sense for Fiat and Chrysler to be merged as one entity. The UAW would be better off and Chrysler would be much healthier and in a better financial position in the long run.”

Sergio Marchionne, CEO of both Fiat and Chrysler, has made it clear that he wants to buy up the UAW’s share and fully integrate Fiat and Chrysler. But the two sides have been unable to agree on a price. Media reports have suggested that the UAW trust wants as much as $5 billion for all of its shares, while some analysts have pegged the value at $3 billion.

Tony Faria, professor emeritus of business at the University of Windsor, said the longer the dispute drags on the more negatively it will affect Chrysler’s operations in North America.

“As long as they’ve got a lot of energy tied up in this, Marchionne and his team could be holding off important decisions on investment in new product and where it’s going to be produced.”

In Windsor, for example, Chrysler has yet to launch the next generation minivan, which would be built on a new global platform, noted Faria. In Brampton, its assembly plant is in need of a new paint shop, he added.

“Chrysler already had held back a number of vehicle launches,” he said. “We were supposed to see a new Chrysler or Dodge crossover vehicle for 2014, which is now being projected for 2015. They pushed back decisions on bring Maserati to the North American market.”

And on Tuesday, Fiat confirmed that it is delaying the return of its Alfa Romeo brand to the U.S. and Canada until the second quarter of 2014. Marchionne told reporters in Detroit in January that the U.S. automaker would start selling the compact 4C sports car this year.

“The Chrysler IPO is a textbook example of the difficulties that can occur when debt is converted into an ownership stake, as it was during Chrysler’s bankruptcy, especially when that the ownership stake is held by an interested party, in this case the United Auto Workers’ healthcare trust,” Jack Nerad, executive editorial director and market analyst at Kelley Blue Book, said in an email.

“The trust is looking for a windfall based on the current expected value of a public-traded Chrysler, but the move may actually harm Chrysler’s future and by extension harm current Chrysler workers. The IPO could well be a stumbling block in the consolidation of Chrysler within a global Fiat operation, and current Chrysler workers might be better served if such a consolidation takes place.”

In its filing with the U.S. Securities and Exchange Commission, Chrysler warned that the IPO could hurt the alliance with Fiat, which owns 58.5 per cent of the American carmaker.

“Fiat has informed us that it is evaluating the various potential impacts that a public offering and the consequential introduction of public stockholders may have on its views of the Fiat-Chrysler alliance, and as such, is considering whether or not to continue expanding the Fiat-Chrysler alliance beyond its existing contractual commitments,” Chrysler said.

It’s a threat that should be taken seriously, said Morningstar’s Hilgert.

“If I were running the business, I would want to have full control over the allocation of every aspect of the business,” he said. “If Fiat no longer has the complete authority to allocate resources as it sees fit across a global enterprise, that makes it potentially less competitive and may wind up costing jobs.”


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