Chrysler 2009 Annual Report Download - page 219

218 FIAT GROUP
CONSOLIDATED
FINANCIAL
STATEMENTS
AT 31 DECEMBER
2009
NOTES
Teksid
Fiat S.p.A. is subject to a put contract with Renault in reference to the original investment of 33.5% in Teksid, now 15.2%. In particular, Renault would acquire
the right to exercise a sale option to Fiat on its interest in Teksid, in the following cases:
in the event of non-fulfilment in the application of the protocol of the agreement and admission to receivership or any other redressement procedure;
in the event Renault’s investment in Teksid falls below 15% or Teksid decides to invest in a structural manner outside the foundry sector;
should Fiat be the object of the acquisition of control by another car manufacturer.
The exercise price of the option is established as follows:
for the original 6.5% of the share capital of Teksid, the initial investment price as increased by a given interest rate;
for the remaining amount of share capital of Teksid, the share of the accounting net equity at the exercise date.
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Chrysler Group LLC
As discussed in the Chrysler transaction section, Fiat is entitled to receive an additional interest in Chrysler of up to 15% (both by value and voting rights),
on a fully diluted basis. This further interest will be granted to Fiat (with no cash consideration required) in three tranches of 5% each, subject to certain pre-
established industrial and commercial targets being achieved. Should one or more of those targets not be reached, Fiat shall, in any event, have the option
to purchase, at a price determined using a pre-established market-based formula, the percentage interest corresponding to the objective(s) not reached.
In addition, the Fiat Group has the option to purchase up to an additional 16% (exercisable from 1 January 2013 to 30 June 2016). The purchase price is
to be determined using a pre-established market-based formula. This option may not be exercised until total loans outstanding from the US Treasury and
the Canadian government fall below US$3 billion. In addition, Fiat’s equity interest in Chrysler may in any case not exceed 49.9% until the loans from the US
Treasury and Canadian government have been entirely repaid.
Sales of receivables
The Group has discounted receivables and bills without recourse having due dates after 31 December 2009 amounting to €4,611 million (€5,825 million at
31 December 2008, with due dates after that date), which refer to trade receivables and other receivables for €3,679 million (€4,054 million at 31 December
2008) and receivables from financing for €932 million (€1,771 million at 31 December 2008). These amounts include receivables, mainly from the sales network,
sold to jointly-controlled financial services companies (FGA Capital) for €2,530 million (€3,181 million at 31 December 2008) and associated financial service
companies (Iveco Finance Holdings, controlled by Barclays) for €440 million (€752 million at 31 December 2008).
Operating lease contracts
The Group enters into operating lease contracts for the right to use industrial buildings and equipments with an average term of 10-20 years and 3-5 years,
respectively. The total future minimum lease payments under non-cancellable lease contracts are as follows:
At 31 December 2009 At 31 December 2008
Due between Due Due between Due
Due within one and beyond Due within one and beyond
(€ million) one year five years five years Total one year five years five years Total
Future minimum lease payments under operating lease agreements 77 171 154 402 88 201 162 451
During 2009, the Group has recorded costs for lease payments for €107 million (€94 million in 2008).
Contingent liabilities
As a global company with a diverse business portfolio, the Group is exposed to numerous legal risks, particularly in the areas of product liability, competition
and antitrust law, environmental risks and tax matters. The outcome of any current or future proceedings cannot be predicted with certainty. It is therefore
possible that legal judgments could give rise to expenses that are not covered, or not fully covered, by insurers’ compensation payments and could
affect the Group financial position and results. At 31 December 2009, contingent liabilities estimated by the Group amount to approximately €140 million
(approximately €190 million at 31 December 2008), for which no provisions have been recognised since an outflow of resources is not considered to