Fiat Chrysler Automobiles is seeing a reduction of around $894 million (EUR715 million) from its latest reported net industrial debt by the end of the year, mainly thanks to a planned Ferrari spin-off, according to a filing with United States Securities and Exchange Commission. FCA had net debt of EUR11.37 billion as of September 30, 2014.
FCA said that a payment of EUR2.25 billion from Ferrari before the spinoff and the elimination of the luxury sports-car unit’s debt of EUR133 million from its parent’s accounts would be offset by the loss of Ferrari's cash and receivables valued at EUR1.67 billion.
FCA also said in the SEC filing that the spinoff’s final impact on its debt could "differ materially" from the forecasted figure due to possible changes to its own and Ferrari's debt at the time of the transaction.
Fiat Chrysler Automobiles chief executive and currently Ferrari chairman Sergio Marchionne disclosed plans to spin off the unit; sell 10 percent of the sports carmaker via a public offering; and distribute the FCA’s remaining stake to its shareholders.
Ferrari’s spinoff is part of a capital-raising plan that also entails issuance of $2.5 billion mandatory convertible bonds as well as a share sale. Raised capital will be used to reduce FCA’s debt and finance its five-year business plan. [source: Reuters.com]