With media stories circulating over the Fiat Group
potential increasing its shareholding in the Chrysler
Group and the possibility of the creation of one car
company once the Italian industrial group is split up
next month, Turin has issued a statement to clarify the
agreed process.
With specific reference to Fiat call options under the
Chrysler-Fiat Alliance agreements, Fiat, currently
holding 20% of Chrysler Group LLC, has the right -
conditioned upon the achievement of three separate
Performance Events - to receive without consideration up
to an additional 15% interest in Chrysler Group LLC.
In particular,
the first Performance Event will occur when Chrysler
receives regulatory approval for an engine based on the
Fiat FIRE family for manufacture in U.S. and Chrysler
commits to production. The second Performance Event will
occur when Chrysler records revenues of $1.5 billion
outside NAFTA and enters into agreements regarding the
distribution in the Latin America region of certain
Chrysler products. Finally, Fiat will receive the third
tranche of 5% interest in Chrysler when Chrysler
receives regulatory approval for a car based on Fiat
platform technology with at least 40 combined mpg and
commits to commercial assembly in the U.S.
In addition to
these rights, for each Performance Event that has not
occurred by January 2013, Fiat may acquire the
associated 5% equity tranches through a primary call
option.
Fiat also has a
second primary call option to acquire up to a further
16% of Chrysler’s equity, subject to a limit on Fiat’s
ownership at 49% prior to full repayment of the UST and
Canadian government loans. Fiat may exercise these two
call options from January 2013 to June 2016.
The consideration to be paid
for the exercise of these two options is determined on
the basis of an EBITDA multiple (average multiple of
reference automakers, not to exceed the Fiat multiple).
In the event that at the time of exercise Chrysler is a
listed company, such consideration will be based on a
market trading price.
