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Fiat chief executive keen on Chrysler’s total buyout
February 01, 2013
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MILAN: Fiat’s Chief Executive Sergio Marchionne said the Italian automaker would like to see the minority stakeholder of US affiliate Chrysler Group to sell out remaining shares as soon as possible.

“The faster we do it, the better it is. It’s up to them,” he said, referring to a United Auto Workers union retiree healthcare trust called VEBA that owns 41 per cent of Chrysler.

Earlier this month, VEBA asked Chrysler to register 16.6 per cent of its Chrysler shares for a future public offering, setting the stage for the third-largest US automaker to trade on the stock market again for the first time since 2007, when it was a unit of Germany’s Daimler AG.

Marchionne he would be “more than happy” to work toward making any future IPO a success, adding however he would prefer for Fiat to buy VEBA’s stake in Chrysler. Marchionne has said in the past that Fiat would like to buy the rest of Chrysler.

Fiat owns 58.5 per cent of Chrysler.

The trust needs to pay medical benefits to 121,624 retired Chrysler workers and their families plus some 40,000 more in the future, according to figures provided by VEBA.

As part of Chrysler’s 2009 bankruptcy agreement, retired Chrysler workers exchanged about $7 billion of health care and life insurance liabilities for a stake in the collapsed company plus a promissory note for $4.8 billion.

The United Auto Workers (UAW) union is keen to see Chrysler hold an IPO, UAW Vice President and Director General Holiefield told Reuters in a recent interview.

“I would love to see Chrysler go public again,” he said. “The VEBA has to have the proper amount of funding to provide healthcare for our retirees.”

Holiefield and Marchionne worked together to produce the 2009 agreement that led to Chrysler’s present turnaround, each taking on risk along with US and Canadian taxpayers.

 The healthcare trust’s stake  - worthless when Chrysler exited bankruptcy - could now be worth billions of dollars. Investment bank UBS has estimated Chrysler’s market value at about $9 billion based on trading multiples for competitors Ford Motor Co and General Motors. VEBA had a funding deficit of $5 billion at the end of 2011, a report from UBS in November showed.

Reuters

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