Chrysler 2014 Annual Report Download - page 35

2014 | ANNUAL REPORT 33
Substantially all of the assets of FCA US and its U.S. subsidiary guarantors are unconditionally pledged as security
under its senior credit facilities and secured senior notes and could become subject to lenders’ contractual rights if an
event of default were to occur.
FCA US and several of its U.S. subsidiaries are obligors or guarantors under FCA US’s senior credit facilities and
secured senior notes. The obligations under the senior credit facilities and secured senior notes are secured by senior
and junior priority, respectively, security interests in substantially all of the assets of FCA US and its U.S. subsidiary
guarantors. The collateral includes 100 percent of the equity interests in FCA US’s U.S. subsidiaries, 65 percent of
the equity interests in its non-U.S. subsidiaries held directly by FCA US and its U.S. subsidiary guarantors, all personal
property and substantially all of FCA US’s U.S. real property other than its Auburn Hills, Michigan headquarters.
An event of default under FCA US’s senior credit facilities and/or secured senior notes could trigger its lenders’ or
noteholders’ contractual rights to enforce their security interest in these assets.
Risks Relating to the Proposed Separation of Ferrari
No assurance can be given that the Ferrari separation will occur.
No assurance can be given as to whether and when the separation of Ferrari will occur. We may determine to delay or
abandon the separation at any time for any reason or for no reason.
The terms of the proposed separation of Ferrari and Ferrari’s stand-alone capital structure have not been determined.
The terms of the proposed separation of Ferrari and Ferrari’s stand-alone capital structure have not yet been determined.
However, the final structure and terms of the separation may not coincide with the terms set forth in this report. No
assurance can be given as to the terms of the prospective interest in Ferrari or the terms of how it will be distributed.
We may be unable to achieve some or all of the benefits that we expect to achieve from our separation from Ferrari.
We may not be able to achieve the financial and other benefits that we expect will result from the separation of Ferrari.
The anticipated benefits of the separation are based on a number of assumptions, some of which may prove incorrect.
For example, there can be no assurance that the separation of Ferrari will enable us to strengthen our capital base
sufficiently to offset the loss of the earnings and potential earnings of Ferrari.
Following the Ferrari separation, the price of our common shares may fluctuate significantly.
We cannot predict the prices at which our common shares may trade after the separation, the effect of the separation
on the trading prices of our common shares or whether the market value of our common shares and the common
shares of Ferrari held by a shareholder after the separation will be less than, equal to or greater than the market value
of our common shares held by such shareholder prior to the separation.
We intend for the Ferrari separation to qualify as a generally tax-free distribution for our shareholders from a U.S.
federal income tax perspective, and as a tax-free transaction from an Italian income tax perspective, but no assurance
can be given that the separation will receive such tax-free treatment in the United States or in other jurisdictions.
It is our intention to structure the Ferrari separation and any spin-off to our shareholders in a tax efficient manner
from a U.S. federal income tax perspective, taking appropriate account of the potential impact on shareholders, but
no assurance can be given that the intended tax treatment will be achieved, or that shareholders, and/or persons
that receive the benefit of Ferrari shares, will not incur substantial tax liabilities in connection with the separation and
distribution. In particular, the requirements for favorable treatment differ (and may conflict) from jurisdiction to jurisdiction
and the relevant requirements are often complex, and no assurance can be given that any ruling (or similar guidance)
from any taxing authority would be sought or, if sought, granted. Following an initial public offering of a portion of our
equity interest in Ferrari, we currently intend to spin-off our remaining equity interest in Ferrari to holders of our common
shares and mandatory convertible securities (which we intend to treat as our stock for U.S. federal income tax purposes),
and we currently intend for such spin-off to qualify as a generally tax-free distribution for holders of our stock for U.S.
federal income tax purposes. However, the structure and terms of any distribution have not been determined and there