VEBA Trust Requests Chrysler To File For IPO

Chrysler\'s Sergio Marchionne

After failing to reach an agreement on the value of its stock owned by the United Auto Workers retiree healthcare trust, Chrysler has announced in a press release that it has filed for an initial public offering.

UPDATE: GM has priced $4.5 billion of senior unsecured notes, $3.2 billion of which will go toward buying back shares from the UAW VEBA. Expected to settle on September 27, the notes include $1.5 billion of 3.5-percent notes due in 2018, $1.5 billion of 4.875-percent notes due in 2023, and $1.5 billion of 6.25-percent notes due in 2043.

GM also announced it will use about $1.2 billion of the new funds to prepay in full the 7-percent notes (including accrued interest) held by the CAW's Union Health Care Trust that are due in installments through 2018.

The automaker did not reveal the amount of shares nor the price they would be offered at in the registration document, but it did set a maximum proposed offering price of $100 million. The offering will be underwritten by J.P. Morgan, and the shares up for grabs will come from a 41.5-percent stake in Chrysler held by the UAW trust. All proceeds will also go to the trust.

Fiat now owns 58.5 percent of Chrysler, and reportedly wants to buy the remaining stake that's held by the UAW VEBA so that both automakers can merge into one. However, Fiat and the UAW trust haven't been able to settle on what Fiat should pay for the 41.5-percent stake. USA Today reports that analysts see the move as a negotiating tactic, employed by the UAW in an attempt to get Fiat to raise its offer and stop the sale to the public. GM also recently announced it plans on buying back almost half of the UAW VEBA trust’s preferred shares for about $3.2 billion.

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