FCA meets with US investors over $2.5 billion bond issue and share sale

Article by Andrew Christian, on December 8, 2014

Fiat Chrysler Automobiles has started meeting with investors in the United States after launching a $2.5 billion convertible bond issue and a share sale aimed at cutting its debt pile and funding its ambitious industrial plan. Fiat Chrysler is planning a EUR48-billion ($59 billion) five-year investment to transform Jeep, Maserati and Alfa Romeo into global brands as it seeks to boost its position in the high-margin market for premium vehicles.

FCA chief executive Sergio Marchionne launched the share and bond offers last week and started a four-day roadshow with investors in New York, according to bankers. To further raise its capital, Marchionne is planning to spin off Ferrari, offer a 10-percent share to the public and distribute its stake in the luxury sportscar maker to its Fiat shareholders and investors buying the convertible bond.

Marchionne’s announcement in Oct. 29, 2014, has led to a surge in FCA's shares, gaining over 40 percent since then. FCA said in a recent statement that it would also offer up to 100 million common shares in the public sale.

FCA’s shares also reached its highest price in 13 years this week on expectations that the bond issue would be fully covered, as investors would want to grab a piece of Ferrari, traders told Reuters. According to IFR, both the share sale and bond offering will be priced after the market closes on Dec. 10.

IFR estimates the $2.5-billion bond to have a price with a yield of between 7.125 percent and 7.875 percent. IFR estimates the rate at which the bond will be converted into shares including a premium in the range of between 17.5 and 22.5 percent. The bond will mature in 2016 and is seen pay an annual coupon. It may be also increased by up to $375 million at the option of the underwriters.

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