Chrysler 2012 Annual Report Download - page 199

Notes
198 Consolidated
Financial
Statements
at 31 December
2012
The senior secured credit agreement includes negative covenants, including but not limited to: (i) limitations on incurrence, repayment and prepayment of
indebtedness; (ii) limitations on incurrence of liens; (iii) limitations on making certain payments; (iv) limitations on transactions with affiliates, swap agreements
and sale and leaseback transactions; (v) limitations on fundamental changes, including certain asset sales and (vi) restrictions on certain subsidiary
distributions. In addition, the Senior Secured Credit Agreement requires Chrysler to maintain a minimum ratio of “borrowing base” to “covered debt” (as
defined in the Facility), as well as a minimum liquidity of $3.0 billion, which includes any undrawn amounts on the Revolving Credit Facility.
The senior secured credit agreement contains a number of events of default related to: (i) failure to make payments when due; (ii) failure to comply with
covenants; (iii) breaches of representations and warranties; (iv) certain changes of control; (v) cross−default with certain other debt and hedging agreements
and (vi) the failure to pay certain material judgements.
Payables represented by securities
At 31 December 2012, the item Payables represented by securities includes the VEBA Trust Note of €3,863 million (€3,908 million at 31 December 2011),
which represents Chrysler’s financial liability to the International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America
(“UAW”) Retiree Medical Benefits Trust (“VEBA Trust”) having a face value of $4,874 million (€3,694 million). This financial liability was recognised by Chrysler
in connection with the settlement of obligations related to postretirement healthcare benefits for certain UAW retirees. The VEBA Trust Note has an implied
interest rate of 9.0% and requires annual payments of principal and interest through 15 July 2023.
At 31 December 2012, Chrysler’s Payables represented by securities also includes the Canadian Health Care Trust Notes totalling €864 million (€820 million
at 31 December 2011), which represents Chrysler’s financial liability to the Canadian Health Care Trust arising from the settlement of postretirement health care
benefits for represented employees, retirees and dependants of Chrysler Canada Inc.’s National Automobile, Aerospace, Transportation and General Workers
Union of Canada (“CAW”). These notes were issued in four tranches maturing up to 2024.
Other
At 31 December 2012, payables for finance leases included in the item Other of Total Debt amount to €459 million and may be analysed as follows:
At 31 December 2012 At 31 December 2011
(€ million)
due within
one year
due between
one and five
years
due beyond
five years Total
due within
one year
due between
one and five
years
due beyond
five years Total
Minimum future lease payments 90 246 215 551 80 286 238 604
Interest expense (20) (57) (15) (92) (22) (69) (27) (118)
Present value of minimum lease payments 70 189 200 459 58 217 211 486
At 31 December 2012, the Fiat Group excluding Chrysler had outstanding financial lease agreements for certain Property, plant and equipment whose
overall net carrying amount totals €268 million (€297 million at 31 December 2011) (Note 16).
As discussed in Note 16, finance lease payables also relate to suppliers’ assets recognised in the consolidated financial statements in accordance with
IFRIC 4.