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Posts Tagged ‘Chrysler debt’

Fiat Expects to Finish Ferrari Spinoff Next Summer

IPO part of a plan to grow FCA globally.

by on Nov.14, 2014

Sergio Marchionne told reporters in Italy that the Ferrari IPO will now happen in the second or third quarter of 2015.

The Ferrari initial public offering is now expected to be complete between the second and the third quarter of 2015, Fiat Chrysler Automobiles Chief Executive Sergio Marchionne told reporters in Italy.

FCA announced last month it planned to spinoff Ferrari from the group, selling a 10% stake via a public offering and distributing the rest of FCA’s stake in Ferrari to its shareholders. The Ferrari IPO is expected to raise $5 billion to reduce FCA’s debt and bolster the company’s balance sheet.

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The spinoff is part of a bigger capital-raising plan that also includes a $2.5 billion convertible bond issue to help cut debt and fund an ambitious business plan aimed at turning FCA into a global carmaker. (more…)

Marchionne Downplays Fiat Chrysler’s Mounting Debt

But investors wary.

by on Jan.30, 2014

FCA CEO Sergio Marchionne told analysts and reporters that the new automaker is carrying a lot of debt, but it was necessary to ensure the company's growth.

Fiat Chrysler Automotive, the new name for combination of Fiat and Chrysler, will be carrying a lot of debt, Sergio Marchionne, the company chief executive officer warned during a conference call with analysts and journalists.

But the CEO of the newly merged and renamed automaker Marchionne insisted the debt is “benign” and required to press ahead with a broad corporate rejuvenation plan. Among Marchionne’s goal are the expansion of global sales of the Jeep brand, the broadening of the maker’s business in China and the rebuilding what was Fiat’s automobile business in Europe and elsewhere. Marchionne also wants FCA to be less dependent on “mass market” vehicles and instead sell more luxury models through its Alfa Romeo and Maserati channels.

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Nevertheless, FCA reduced its guidance on 2014 profits, indicating net income will be 3.6 billion euros to 4 billion euros, or $4.9 billion to $5.4 billion. That’s well under the target set in 2012 for a profit of 4.7 billion euros to 5.2 billion euros. Fiat shares fell 4.1% on the news. (more…)

Chrysler Gets Creative to Bolster Bottom Line

Automaker renegotiates key loan.

by on Dec.24, 2013

Fiat-Chrysler CEO Sergio Marchionne continues to push off an IPO for the U.S. automaker.

The Chrysler Group has found another way to bolster its bottom line.

The automaker has taken advantage of favorable market conditions to reduce the interest rate on the $2.9 billion term loan that helped it pay off the financial obligations to the U.S. and Canadian governments run up during its post-bankruptcy bailout.

“Under current market conditions, this action reduces the annual interest cost for the term loan by approximately $22 million. The term loan maintains a maturity date of May 24, 2017,” Chrysler said in a statement.

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The loan was negotiated in 2011 and used to repay the federal  and Canadian governments which had loaned Chrysler  a total of $7.6 billion after it emerged from bankruptcy in 2009. Chrysler paid off the $5.9 billion loan from the U.S. Treasury and the $1.7 billion loan from Canadian government six years ahead of schedule to get out from under what Fiat/Chrysler CEO Sergio Marchionne described as onerous terms.

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“Old” Chrysler Racks Up $10 billion in June losses

Bankruptcy reorganization again under fire.

by on Sep.04, 2009

Leaves behind $10.2 billion in losses to "Old Carco LLC."

Leaves behind $10.2 billion in losses to "Old Carco LLC."

If recent sales numbers are any indication, Chrysler Group LLC has some serious challenges ahead of it as its foreign master, Fiat, struggles to turn the U.S. carmaker into a profit-making entity.

At least Chrysler won’t have to report the $10.2 billion in losses reportedly run up by the operations it left behind as part of its bankruptcy.

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When Chrysler emerged from Chapter 11, in June, it spun off an assortment of debts and bad assets, including seven unneeded plants, were left behind, effectively spun off into a separate “old” Chrysler, Old Carco LLC, that will be closed down in the not-too-distant future.  According to a still-unaudited accounting filed with the federal bankruptcy court in New York City, that collection of bad assets rang up a whopping $10.2 billion in losses during June alone.

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U.S. Treasury Department Flatly Rejects Chrysler Debt Proposal from Bondholders

“More constructive position” needed.

by on Apr.22, 2009

Treasury Sec. Tim Geithner has called for sharp concessions by Chrysler lenders.  His department is rejecting a new proposal by debt holders.

Tim Geithner, U.S. Treasury Secretary, is flatly rejecting a new proposal by Chrysler debt holders.

“A more constructive position” is needed on the part of Chrysler LLC’s lenders, the U.S. Treasury Department is saying, in response to a proposal by banks, private equity firms and others who hold $6.9 billion in the automaker’s debt – and who could be the final obstacle to a deal that saves Chrysler from bankruptcy.

Late last month, President Barack Obama gave the flailing automaker 30 days to pull its financial house in order and complete a strategic alliance with its Italian white knight, Fiat SpA, otherwise Chrysler would be forced to file for court protection.  Few believe the U.S. maker would be able to emerge from bankruptcy and would most likely be broken up and sold in pieces.

To meet the White House mandate, and to win over Fiat CEO Sergio Marchione, Chrysler needs to complete a number of steps that include winning new concessions from its workers – both in the U.S. and Canada – and restructuring its heavy debt load.

Negotiators for the various lenders earlier this week proposed a complex agreement that would allow them to continue to hold $4.5 billion in secured debt, give them $1 billion in preferred equity in the new company formed by an alliance with Fiat, and another 40% of that company’s common shares.  Industry sources say the lenders also demanded a $1 billion investment by Fiat which, until now, had expected to gain a 35% or larger stake in Chrysler for no up-front cash. (more…)

Chrysler Bondholders May Be Ready to Settle

But still more roadblocks could scuttle automaker's rescue plan.

by on Apr.21, 2009

Why is this man smiling? Whether Chrysler survives or fails, CEO Bob Nardelli is not likely to remain at its helm.

Why is this man smiling? Whether Chrysler survives or fails, CEO Bob Nardelli -- shown here with a picture of legendary CEO Lee Iacocca -- is not likely to remain at its helm.

One of the most pressing obstacles in the way of a Chrysler rescue plan could be resolved, according to reports circulating in Detroit circles.  If accurate, the automaker’s lenders will be willing to swap $2.5 billion of its $6.9 billion in secured debt for equity in a new company that would be formed by a proposed partnership between Chrysler LLC and the Italian carmaker Fiat SpA.

First reported in the Detroit Free Press, various sources now indicate the leaders of a group representing Chrysler’s bondholders made the counter-offer to Chrysler and the U.S. Treasury Department on Monday night.  The debt holders had previously rejected a plan to take $1 billion in cash to wipe out Chrysler’s debt.  Treasury officials overseeing the automaker’s rescue plan had been hoping to ultimately eliminate two-thirds of Chrysler’s debt.

A senior Chrysler spokesperson declined comment, Tuesday evening.  There’s also been no word from the Treasury Department.

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