Chrysler 2015 Annual Report Download - page 215

2015 | ANNUAL REPORT 215
Mexico Bank Loan
On March20, 2015, FCA Mexico, S.A. de C.V., (“FCA Mexico”), our principal operating subsidiary in Mexico, entered
into a U.S.$900 million (€0.8 billion) non-revolving loan agreement (“Mexico Bank Loan”) maturing on March 20, 2022
and received an initial disbursement of U.S.$500 million (€0.5 billion at December31, 2015), which bears interest at
one-month LIBOR plus 3.35 percent per annum. Effective July 20, 2015, the Group extended the disbursement term of
the Mexico Bank Loan through September 20, 2016, during which time the remaining U.S.$400 million (€0.4 billion at
December 31, 2015) is available for disbursement, subject to meeting certain preconditions for additional disbursements
and a commitment fee of 0.50 percent per annum on the undisbursed balance. Principal payments are due on the loan in
seventeen equal quarterly installments based on the total amount of all disbursements made under the loan agreement,
beginning March 20, 2018, and interest is paid monthly throughout the term of the loan. The loan agreement requires
FCA Mexico to maintain certain fixed and other assets as collateral, and comply with certain covenants, including, but
not limited to, financial maintenance covenants, limitations on liens, incurrence of debt and asset sales. At December
31, 2015, the Group was in compliance with all covenants under the Mexico Bank Loan. The Group may not prepay all
or any portion of the loan prior to the 18-month anniversary of the effective date of the loan agreement. The proceeds
of this transaction were used to prepay all amounts outstanding under the Mexican development bank credit facilities
amounting to approximately €414 million. In connection with the prepayment of the Mexican development bank credit
facilities, a loss on extinguishment of debt of €9 million was recorded within Net financial expenses in the Consolidated
Income Statement for the year ended December31, 2015 reflecting the write-off of the remaining unamortized debt
issuance costs. At December 31, 2015, €0.4 billion of the Mexico Bank Loan was undisbursed.
Payables represented by securities
At December31, 2015, Payables represented by securities primarily included the unsecured Canadian HCT Notes
totaling €366 million, including accrued interest, (€651 million at December31, 2014, including accrued interest),
which represents FCA US’s principal Canadian subsidiary’s financial liability to the Canadian Health Care Trust arising
from the settlement of its obligations for postretirement health care benefits for National Automobile, Aerospace,
Transportation and General Workers Union of Canada “CAW” (now part of Unifor), which represented employees,
retirees and dependents. During the year ended December31, 2015, FCA US’s Canadian subsidiary made payments
on the Canadian HCT Notes, which included prepayments on the remaining scheduled payments due on the Canada
HCT Tranche A Note and accrued interest, totaling €288 million. The prepayment on the Canadian HCT Tranche A
Note made on July 31, 2015 resulted in a €16 million gain on extinguishment of debt that was recorded within Net
financial expenses in the Consolidated Income Statement for the year ended December 31, 2015.
As described in more detail in Note 19, FCA issued Mandatory Convertible Securities with an aggregate notional
amount of U.S.$2,875 million (€2,293 million). The obligation to pay coupons as required by the Mandatory
Convertible Securities meets the definition of a financial liability as it is a contractual obligation to deliver cash to
another entity. The fair value amount determined for the liability component at issuance of the Mandatory Convertible
Securities was U.S.$419 million (€335 million at December31, 2014) calculated as the present value of the coupon
payments due less allocated transaction costs of U.S.$9 million (€7 million at December31, 2014) that are accounted
for as a debt discount. Subsequent to issuance, the financial liability for the coupon payments is accounted for at
amortized cost. At December31, 2015, the financial liability component was U.S.$216 million (€199 million) (U.S.$420
million or €346 million at December31, 2014).
During the year ended December 31, 2014, the balance of FCA US’s financial liability to the VEBA Trust (the “VEBA Trust
Note”) that had been issued by FCA US in connection with the settlement of its obligations related to postretirement
healthcare benefits for certain UAW retirees, was prepaid. The proceeds of the February 7, 2014 issuances of the
Secured Senior Notes and the Senior Credit Facilities were used to prepay all amounts outstanding of approximately
$5.0 billion (€3.6 billion) under the VEBA Trust Note. The $4,715 million (€3,473 million) principal payment of the VEBA
Trust Note consisted of $128 million (€94 million) of interest that was previously capitalized as additional debt with the
remaining $4,587 million (€3,379 million) representing the original face value of the VEBA Trust Note.