Chrysler 2013 Annual Report Download - page 112

111
Report on
Operations
Subsequent Events
On January 1st, 2014, Fiat S.p.A. announced an agreement with the VEBA Trust, under which its wholly-owned subsidiary, Fiat North
America LLC (“FNA”), would acquire all of the VEBA Trust’s equity membership interests in Chrysler Group LLC (“Chrysler Group”),
representing 41.5% of Chrysler Group. The transaction closed on 21 January 2014. In consideration for the sale of its membership
interests in Chrysler Group, the VEBA Trust received an aggregate consideration of USD 3,650 million consisting of a special distribution
paid from available cash on hand by Chrysler Group to its members, in an aggregate amount of USD 1,900 million (FNA directed its
portion of the special distribution to the VEBA Trust as part of the purchase consideration) and a payment from FNA for the remainder
of USD 1,750 million in cash purchase consideration to the VEBA Trust. Fiat funded the USD 1,750 million in cash from available
cash on hand. Contemporaneously with the transactions described above, Chrysler and the UAW entered into a memorandum of
understanding under the collective bargaining agreement with the UAW in which the UAW made commitments to continue to support
Chrysler industrial operations and the further implementation of the Fiat-Chrysler Alliance. In particular, the UAW has committed to use its
best efforts to cooperate in the continued roll-out of World Class Manufacturing, or WCM, programs, actively participate in benchmarking
efforts associated with implementation of WCM programs across all Fiat-Chrysler manufacturing sites to ensure objective performance
assessments and provide for proper application of WCM principles, and to actively assist in the achievement of the Group long-term
business plan. In consideration of these commitments, Chrysler agreed to make payments to the VEBA Trust totaling USD 700 million to
be paid in four equal annual installments. The initial payment of USD 175 million was made on 21 January 2014 and additional payments
will be payable on each of the next three anniversaries of the initial payment.
On January 10th, Standard & Poor’s Ratings Services:
raised its ratings on Chrysler Group LLC, including the corporate credit rating, to ‘BB-’ from ‘B+’. The outlook is stable.
confirmed its rating on Fiat S.p.A.’s long-term debt at ‘BB-’. The short-term rating was confirmed at ‘B’. The outlook remains stable.
On January 29th, the Board of Directors of Fiat S.p.A. approved a corporate reorganization and the formation of Fiat Chrysler Automobiles
(“FCA”) as a fully-integrated global automaker. Following Fiat’s acquisition of the minority equity interest in Chrysler Group LLC, previously
held by the VEBA Trust, the Fiat Board of Directors reviewed options for the most appropriate governance and corporate structure. In order
to establish a true peer to the major global automotive groups, in both scale and capital market appeal, the Board decided to establish Fiat
Chrysler Automobiles N.V., organized in the Netherlands, as the parent company of the Group.
Under the proposal approved by the Fiat Board, Fiat shareholders will receive one FCA common share for each Fiat share held and the FCA
common shares will be listed on the New York Stock Exchange (NYSE) with an additional listing on the Mercato Telematico Azionario (MTA)
in Milan. It is intended that FCA will be resident for tax purposes in the United Kingdom, but this is not expected to affect the taxes payable
by Group companies in the jurisdictions where their activities are carried out.
On February 7th, Chrysler Group LLC closed its offering of secured senior debt securities, raising approximately USD 3.0 billion in net
proceeds; and senior secured term loan facilities, raising approximately USD 2.0 billion in net proceeds. Chrysler Group applied the proceeds
of the debt offering to prepay all amounts outstanding, including accrued and unpaid interest, of approximately USD 5.0 billion under the
senior unsecured note issued on 10 June 2009 to the VEBA Trust with an original face amount of USD 4.587 billion (the “VEBA Trust Note”).
Subsequent Events and Outlook Report on Operations
Subsequent Events and Outlook