Minority Owner Pushes Chrysler Toward IPO

Published January 09, 2013

| Reuters

The minority owner of Chrysler Group LLC on Wednesday pushed the U.S. automaker to take the first step toward becoming a public company again by demanding that Chrysler register shares with U.S. regulators.

The minority owner, a United Auto Workers union retiree healthcare trust, demanded that Chrysler register 16.6 percent of company shares with the U.S. Securities and Exchange Commission. The trust has the right to make the demand because of the 2009 agreement that brought Chrysler out of bankruptcy and left Fiat SpA as part-owner.

The Italian automaker now owns 58.5 percent of Chrysler and the healthcare trust, a voluntary employee beneficiary association (VEBA), owns 41.5 percent.

It could take eight months or longer for the registration process to take place, if it occurs, said Chrysler spokeswoman Shawn Morgan.

The VEBA may withdraw from the registration process at any time, she said.

Brock Fiduciary, which manages the VEBA's investment in Chrysler, said through a VEBA spokeswoman that it would not be making a statement. The VEBA deferred any comment to Brock.

London-based UBS analyst Philippe Houchois said the move by the VEBA to force Chrysler to register shares is a ploy in a separate battle over the value of Chrysler shares, and that there will not be an IPO.

Fiat and the VEBA are fighting over the value of a 3.3 percent share of Chrysler. The same 2009 agreement that allows the trust to demand that Chrysler register to sell shares to the public allows Fiat to make periodic purchases of Chrysler shares from the VEBA.

Last July, Fiat filed for the first 3.3 percent tranche of VEBA-owned Chrysler shares. The VEBA balked at the price Fiat offered, $139.7 million, saying it was too low. Fiat in September filed suit against the VEBA to force the healthcare trust to sell the shares.

The issue is now being considered by a Delaware court.

"Fiat is trying to buy Chrysler on the cheap," said Houchois. "VEBA's only pressure it can put on Fiat is to list the shares in an IPO to get a higher price. It's a recognition that VEBA's case is weak. I don't think there will be an IPO."

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