Chrysler 2013 Annual Report Download - page 113

112 Report on Operations Subsequent Events and Outlook
The secured senior debt securities, issued on top of existing bonds, consist of USD 1.375 billion aggregate principal amount of 8% Secured
Senior Notes due 2019 at an issue price of 108.25% of their aggregate principal amount plus accrued interest from 15 December 2013,
and USD 1.380 billion aggregate principal amount of 8¼% Secured Senior Notes due 2021 at an issue price of 110.50% of their aggregate
principal amount plus accrued interest from 15 December 2013. The issue prices represent a yield to maturity of 6.165% per annum for the
Notes due 2019 and 6.433% per annum for the Notes due 2021.
In connection with the term loan facilities, Chrysler Group borrowed (1) an additional USD 250 million of term loans under its existing senior
secured credit facilities maturing May 24, 2017, under which Chrysler Group borrows at 2.75% over LIBOR, subject to a LIBOR floor of
0.75%; and (2) USD 1.75 billion of term loans under a new senior secured term loan facility maturing 31 December 2018, at 2.50% over
LIBOR, subject to a LIBOR floor of 0.75%.
The refinancing transactions are expected to result in yearly interest expense savings, for the period from 2014 to 2016, of approximately
USD 134 million.(1)
On February 11th, Moody’s Investors Service lowered Fiat S.p.A.’s Corporate Family Rating from ‘Ba3’ to ‘B1’ and consequently, in
accordance with their methodology, ratings on the notes issued by Fiat Finance & Trade Ltd. S.A. and Fiat Finance North America Inc. were
also lowered from ‘B1’ to ‘B2’.
(1) For the purposes of Chrysler Group consolidated financial statements (prepared in accordance with US GAAP) the refinancing transactions are expected to result in yearly
interest expense savings, for the period from 2014 to 2016, of approximately USD 200 million including the elimination of the non-cash VEBA Trust Note discount amortization of
approximately USD 65 million per annum. In addition, for the same reason, Chrysler Group expects to record a non-cash charge of approximately USD 500 million in connection
with the repayment of the VEBA Trust Note.
For the purposes of its consolidated financial statements (prepared in accordance with IFRS) Fiat Group expects to record interest expense savings lower than those
recorded by Chrysler Group and to report no non-cash charges in connection with the repayment of the VEBA Trust Note, which has been carried at face value as a result
of the purchase accounting related to the acquisition of control and consolidation of Chrysler Group in May 2011.