This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Chrysler Files for IPO Amid Fiat, UAW Valuation Dispute

DETROIT ( TheStreet) - Chrysler has filed a share offering to return to the public stock markets, as the company's majority shareholder, Fiat, continues to press for full control of the automaker.

Chrysler said late Monday that it has filed a registration statement with the Securities and Exchange Commission for an IPO. The number and price of the shares has not been determined. The shares are expected to be traded on the New York Stock Exchange if a listing is consummated.

The sole seller would be the United Auto Worker's Retiree Medical Benefits Trust, which holds a 41.5% ownership stake and would receive all of the net proceeds. J.P. Morgan will be the leading manager of the offering.

Chrysler's effort at a public offering has been complicated by a battle between the UAW medical benefits trust and Fiat, the majority owner with a 58.5% stake. Fiat has sought to buy all of the shares it does not own.

In late July, both investors in the Chrysler joint venture were unable to complete a transfer of Chrysler's Class A shares, in a deal that would put Fiat's stake at roughly 68.5%.

Both parties are at odds over a valuation for Chrysler as Fiat seeks to take full control of the automaker and the UAW looks to cash out on its holding.

Fiat is reported to be working on arranging financing to buy out the UAW's stake, however, the company did not have any progress to report in its most recent earnings call with investors.

An IPO of Chrysler could fetch a price the UAW is looking for or could further Fiat's efforts on a stake buyout. However, Monday's filing included commentary that is indicative of a standoff between Chrysler's two large shareholders.

Chrysler said in its filing that any dispute between the company and Fiat could undermine the company's financial health and strategic position relative to its larger competitors.

"Fiat has informed us that it is evaluating the various potential impacts that a public offering and the consequential introduction of public stockholders may have on its views of the Fiat-Chrysler Alliance, and as such, is considering whether or not to continue expanding the Fiat-Chrysler Alliance beyond its existing contractual commitments," Chrysler said in its filing.

"If Fiat becomes unwilling to work with us beyond the scope of its existing contractual obligations, there may be a material adverse effect on our business prospects, financial condition and results of operations," the company added.

Chrysler last traded on the NYSE in November 1998, before being sold to Daimler. The German automaker sold 80% of the company to Cerberus in 2007, selling the rest shortly before a 2009 bankruptcy filing.

Chrysler has become profitable since Fiat CEO Sergio Marchionne rescued it from bankruptcy in 2009, a year when the auto industry floundered. GM (GM - Get Report) was also in bankruptcy and Ford (F - Get Report) shares hit a low of $1.50 in February.

Two months ago, Chrysler reported that second-quarter net income rose for the eighth consecutive quarter, as the company earned $507 million. Through the first six months, Chrysler earned $33.4 billion in revenue and $764 million in net income. While revenue gained about 1% from year-ago levels, profit and operating cash flows have fallen.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
F $15.78 -0.19%
GM $35.40 -0.06%
AAPL $128.73 -0.17%
FB $78.81 -0.23%
GOOG $540.66 0.51%

Markets

DOW 18,070.40 +46.34 0.26%
S&P 500 2,114.49 +6.20 0.29%
NASDAQ 5,016.9290 +11.5380 0.23%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs