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As predicted, Chrysler has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission (the “SEC”) to propose selling common shares to the public. The number of shares to be offered and the price range for the offering have not yet been determined; they will be sold by the UAW Retiree Medical Benefits Trust (“VEBA”) alone. J.P. Morgan Securities LLC will be the lead book-running manager of the offering. 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. The start date of the stock sale will be “As soon as practicable after the effective date of this Registration Statement,” according to the filing. The estimated maximum value of the stock will be $100 million. Chrysler Group LLC is a Delaware limited liability company..

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A few quick points. CGLLC will be converted to Chrysler Group Corporation. Fiat North America LLC will merge with and into CGC.
 

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[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]
[SIZE=12pt] [/SIZE]



[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]
 

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Im sure that is Marchionne playing hardball, with VEBA, however that is language that was best conveyed to the VEBA in private, yet that is a pretty good tactic to scare off investors in order to lower the price per share, of the VEBA IPO.

Remember, these are non-voting shares and Fiat is already very intertwined into Chrysler.
 

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MoparNorm said:
Im sure that is Marchionne playing hardball, with VEBA, however that is language that was best conveyed to the VEBA in private, yet that is a pretty good tactic to scare off investors in order to lower the price per share, of the VEBA IPO.

Remember, these are non-voting shares and Fiat is already very intertwined into Chrysler.
Absolutey! The whole purpose of this spiel is to keep the price of the shares low, allowing Marchionne to make a deal with VEBA without going public. You must admire the fighting spirit....(I do!)
It's a chess game!


In theory, if the price of the shares ends up being high, FIAT could sell 7% of Chrysler and retain a 51% majority and use the cash from the sale to finance its investments in Europe. Either way, they could generate the cash they need for the products they need when the European recovery finally happens.
 

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If the IPO falls short, Marchionne then puts on his white sweater and rides to the rescue. ;)
 

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JavelinAMX said:
He actually OWNS a white sweater?
...and a white horse...
 

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JavelinAMX said:
Which end? :)
ROFL

It will be fun to watch this particular chess game. *grabs popcorn*
 

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There is really no debating that SM is a brilliant businessman and as has been said this was a pretty brilliant move and should hurt the price of the IPO.
 

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JRS200x said:
There is really no debating that SM is a brilliant businessman and as has been said this was a pretty brilliant move and should hurt the price of the IPO.
No, this is typical SM. And I loved the quote below....

"Fiat has informed us that it is reconsidering the benefits and costs of further expanding its relationship with us," Chrysler said in its S-1 filing with the U.S. Securities and Exchange Commission.
Was this the left hand telling the right hand or vice versa? The reality distortion field must be on overdrive for anyone knowing anything about Fiat to take this seriously. Fiat needs Chrysler.
 

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sebring96hbg said:
No, this is typical SM. And I loved the quote below....



Was this the left hand telling the right hand or vice versa? The reality distortion field must be on overdrive for anyone knowing anything about Fiat to take this seriously. Fiat needs Chrysler.
FIAT Needs Chrysler's money: there is a difference. It can also be stated that Chrysler needs FIAT's small engines and fuel-efficient cars to meet future regulatory rules.
 

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sebring96hbg said:
Was this the left hand telling the right hand or vice versa? The reality distortion field must be on overdrive for anyone knowing anything about Fiat to take this seriously. Fiat needs Chrysler.
Actually it just explained the conflicting statements coming from M.
Fiat (Sergio), just told Chrysler (Marchionne), that he was reconsidering the costs and benefits of the relationship with hisself.

Oddly enough, because most investors are poorly informed, it might work and it would give the impression that Marchionne is on pins and needles because Sergio may no longer talk to him...
 

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MoparNorm said:
Actually it just explained the conflicting statements coming from M.
Fiat (Sergio), just told Chrysler (Marchionne), that he was reconsidering the costs and benefits of the relationship with hisself.

Oddly enough, because most investors are poorly informed, it might work and it would give the impression that Marchionne is on pins and needles because Sergio may no longer talk to him...
As big as Sergio's ego is, this is quite plausible.
 

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MoparNorm said:
Actually it just explained the conflicting statements coming from M.
Fiat (Sergio), just told Chrysler (Marchionne), that he was reconsidering the costs and benefits of the relationship with hisself.

Oddly enough, because most investors are poorly informed, it might work and it would give the impression that Marchionne is on pins and needles because Sergio may no longer talk to him...
That is the most hilariously realistic scenario I have ever read.

Mike
 
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Mike V. said:
That is the most hilariously realistic scenario I have ever read.

Mike
Funny, yes. Realistic, no. The truth is Sergio and Marchionne are working together to put VEBA back in its proper place (where they agreed to be when the original deal was made...).
 

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Yah, as someone said, Fiat is relying on Chrysler plenty. Fiat, at this juncture, needs Chrysler, easily as much, if not more, than Chrysler needs Fiat. Much of this is thanks simply to the markets. Chrysler is continually gaining sales, and Europes market is hurting. BUT, it's somewhat moot because he's gonna get what he wants, or at least nearly. He's pulling the moves, and generally, he wins.
 

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bumonbox said:
Yah, as someone said, Fiat is relying on Chrysler plenty. Fiat, at this juncture, needs Chrysler, easily as much, if not more, than Chrysler needs Fiat. Much of this is thanks simply to the markets. Chrysler is continually gaining sales, and Europes market is hurting. BUT, it's somewhat moot because he's gonna get what he wants, or at least nearly. He's pulling the moves, and generally, he wins.
FIAT needs cash and can get it by selling Chrysler. Chrysler needs FIAT's technology and international market savvy. FIAT could keep Jeep and sell the rest of Chrysler to DaimlerBenz or to the Chinese...think about it (and Marchionne is certainly capable of doing that!)
 
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