[SIZE=12pt]Looks like the gloves are off, the fight has started and it is going to be ugly![/SIZE]
[SIZE=12pt]Chrysler is pointing out in its filing papers the risks linked to the IPO. Clearly they are trying to discourage potential buyers from acquiring shares, as FIAT could retaliate and basically leave Chrysler alone or perhaps sell it to another investor.... The Filing papers for the IPO, written by Chrysler, highlight several risks connected with the sale of shares by VEBA. They make very interesting reading![/SIZE]
[SIZE=12pt]These are (verbatim) salient portions of the document presented by Chrysler:[/SIZE]
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[SIZE=12pt]“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. If Fiat becomes unwilling to work with us beyond the scope of its existing contractual obligations, there may be a material adverse effect on our business prospects, financial condition and results of operations.”[/SIZE]
[SIZE=12pt]“Further, Fiat has expressed its desire to acquire all of our outstanding equity or otherwise create a simplified, unified capital structure through the acquisition of the minority ownership in us held by the VEBA Trust, a portion of which will be sold in this offering. Completion of this offering will prevent or delay Fiat from meeting this objective, and Fiat has stated that it believes a publicly-traded Chrysler Group will prevent or delay the full realization of the benefits of the Fiat-Chrysler Alliance. Fiat has informed us that it is reconsidering the benefits and costs of further expanding its relationship with us and the terms on which Fiat would continue the sharing of technology, vehicle architectures and platforms, distribution networks, production facilities and engineering and management resources.”[/SIZE]
[SIZE=12pt]“Following the completion of this offering, Fiat will continue to own a majority of our equity. Fiat will have the ability, should it choose to do so, to sell some or all of its shares of our common stock in a privately negotiated transaction or in capital markets offerings pursuant to its registration rights. … if Fiat were to sell a sufficiently large portion of its interest in us, such a transaction could result in a change in control of us, which could also trigger an event of default under certain of our debt agreements. … Additionally, if Fiat privately sells a significant equity interest in us, we may become subject to the control of a presently unknown third party.”[/SIZE]
[SIZE=12pt] “Among the most significant regulatory changes we face over the next several years are the heightened requirements for fuel economy and GHG emissions. CAFE provisions under EISA mandate that, by 2025, car and truck fleet-wide average fuel economy must be materially higher than that required today. … This increased scrutiny could have an effect on the fuel economy ratings of certain of our vehicles, which, in turn, could affect our consumer perception and sales … A disruption of Fiat’s supply of such vehicles, or of technology or powertrains, to us could have an effect on the model year average fuel economy ratings of our fleet, which, in turn, could affect consumer perception of our company and our sales.”[/SIZE]
[SIZE=12pt]“Unlike most of our competitors who operate and control affiliated finance companies, we do not have a finance company dedicated solely to our operations. … On May 1, 2013, Santander Consumer USA Inc., or SCUSA, began serving as our private-label financing provider under the Chrysler Capital brand name and managing retail and wholesale financing needs for our dealers and retail customers following the termination of our relationship with Ally Financial Inc., or Ally, in April 2013. Our decision to transition our financing services relationship to SCUSA and to develop a private-label financing solution subjects us to significant risks, particularly in the short term as SCUSA ramps up its operations to serve the financing needs of our dealers and retail customers.”[/SIZE]
[SIZE=12pt]“Product recalls also harm our reputation and may cause consumers to question the safety or reliability of our products. For example, we estimate that we will incur costs of $151 million in connection with a voluntary safety recall for the 1993-1998 Jeep Grand Cherokee and the 2002-2007 Jeep Liberty and a customer satisfaction action for the 1999-2004 Jeep Grand Cherokee, both of which we initiated following a recall request from NHTSA related to the risk of fuel tank fire from rear impact collisions.”[/SIZE]
[SIZE=12pt]“At the end of 2012, our defined benefit pension plans were underfunded by approximately $8.9 billion.”[/SIZE]
[SIZE=12pt]“We have a substantial amount of indebtedness. As of June 30, 2013, our total debt, including the debt of our subsidiaries, was $13.7 billion (based on the outstanding principal balance of such indebtedness), excluding undrawn commitments of $1.3 billion under our revolving credit facility.”[/SIZE]
