Chrysler 2012 Annual Report Download - page 149

Notes
148 Consolidated
Financial
Statements
at 31 December
2012
Fiat’s contractual right to receive an additional 5% ownership interest in Chrysler with no monetary consideration on the occurrence
of the Ecological Event, previously recognised in the Consolidated financial statements at zero, was recognised under Other
investments and financial assets at fair value at 1 June 2011. The resulting gain of €288 million ($415 million) was recognised in the
income statement as Unusual income/(expense). Fair value was also based on the above-stated fair value of Chrysler’s equity of
$8,290 million (€5,763 million).
The consideration paid for this transaction and the related net cash flows were as follows:
($ million) (€ million)
CONSIDERATION PAID 1,268 881
Net cash outflows/(inflows) on acquisition:
Consideration paid 1,268 881
Cash and cash equivalents acquired (9,358) (6,505)
TOTAL NET CASH OUTFLOWS/(INFLOWS) ON ACQUISITION (8,090) (5,624)
In addition, in the third quarter of 2011, Fiat acquired additional interests in Chrysler from the U.S. Treasury and Canadian government
(6.031% and 1.508% on a fully-diluted basis) for cash consideration of $500 million and $125 million respectively (€351 million and
€87 million respectively) and Fiat also acquired the U.S. Treasury’s rights under the Equity Recapture Agreement between the U.S.
Treasury and the VEBA Trust in exchange for cash consideration of $75 million, of which $15 million was paid to the Canadian
government pursuant to a separate arrangement between the U.S. Treasury and the Canadian government. As a result of these
transactions, Fiat’s ownership interest in Chrysler at 31 December 2011 was 53.5% (on a fully-diluted basis). The acquisition of these
non-controlling interests was recognised to equity.
In January 2012, Fiat announced that the third performance event (“Ecological Event”) established in Chrysler’s LLC Operating
Agreement, as amended through the date hereof, had been achieved, leading to a further 5% increase of its holding in Chrysler. At 31
December 2012 Fiat had a 58.5% ownership interest in Chrysler.
At the date of this Annual report, Fiat holds the following options and rights:
VEBA Trust Call Option: the VEBA Trust granted Fiat a call option on a portion of the Class A membership interests held by the
VEBA Trust. This call option is exercisable from 1 July 2012 to 30 June 2016, and covers up to 40% of the membership interests
currently held by the VEBA Trust, less any membership interests previously transferred under the Equity Recapture Agreement
described below, and may be exercised for no more than 8% of such membership interests in any six month period. The price of
the membership interests acquired in connection with the exercise of the VEBA Trust Call Option is dependent on whether or not a
Chrysler Group Initial Public Offering (“IPO”) has been completed at the time the option is exercised. If a Chrysler Group IPO has not
occurred, the exercise price for this option is determined using a defined market-based multiple, not to exceed Fiat’s multiple, applied
to Chrysler Group’s reported EBITDA for the most recent four quarters, less net industrial debt. If exercised contemporaneously
with a Chrysler Group IPO, the exercise price is equal to the Chrysler Group IPO price. Subsequent to a Chrysler Group IPO, the
exercise price is determined by reference to a volume-weighted average price per share of Chrysler Group’s common stock. On
3 July 2012, Fiat notified VEBA of Fiat’s exercise of its option to purchase a portion of VEBA’s ownership interest in Chrysler. That
tranche represents approximately 3.3% of Chrysler’s outstanding equity. On 26 September 2012, Fiat announced that Fiat North
America (a wholly-owned subsidiary) was seeking a declaratory judgment from the Delaware Court of Chancery to confirm the price
to be paid for the stake, since the parties had not reached an agreement on the purchase price. On 3 January 2013, Fiat notified
VEBA of its exercise of its option to purchase a second tranche of the interest held in Chrysler Group LLC by VEBA, representing
approximately 3.3% of Chrysler’s outstanding equity. In the event that these pending transactions are completed as contemplated,
Fiat will hold approximately 65.17% of the outstanding equity in Chrysler.