VEBA to present arguments on Chrysler stake pricing this Monday

Article by Anita Panait, on November 9, 2012

The Voluntary Employees Beneficiary Association (VEBA) healthcare trust, which is affiliated with the United Auto Workers union, is expected to present its argument in a Delaware on Monday, Nov. 12, 2012, in a legal dispute over the price Italian Fiat will pay for the first of several incremental stakes in Chrysler Group. VEBA healthcare trust holds a minority stake in Chrysler.

Fiat is eyeing to pay $139.7 million (EUR109 million) for the healthcare trust’s 3.3 percent stake in Chrysler. The payment figure is based on a formula created when Fiat took control of Chrysler as the latter came out of bankruptcy in 2009. Fiat and VEBA have yet to agree on the pricing of the stake in Chrysler. Investors are expected to keep an eye on VEBA’s filing on Monday to see how the trust values the stake it is selling.

Investors are also expected to look for any counterclaims from the VEBA that raise questions about the legitimacy of the 2009 contract with Fiat that governs the healthcare trust's sale of the stake.

The acquisition of VEBA’s stake could raise Fiat’s holdings in Chrysler from 58.5 percent to as much as 75 percent. This may eventually pave way to Fiat’s goal of effecting a merger with Chrysler.

Fiat is already controlling the management of Chrysler, but owning the US carmaker would allow it to restructure debt and ensure that Chrysler generates enough cash to back up Fiat's loss-making operations in Europe, analysts said.

Max Warburton, analyst at Bernstein Research, wrote in an October 10 report that it is in both sides' interests to find a way forward and it is inevitable that Fiat will eventually fully consolidate Chrysler, thereby allowing the Italian carmaker to restructure the subsidiary’s debt and pool cash. The VEBA is a healthcare trust for retired Chrysler union workers. The VEBA acquired a stake in Chrysler as part of the carmaker’s bankruptcy restructuring in 2009.

Topics: chrysler

If you liked the article, share on:

Comments

Recommended

Earlier this week, Nissan revealed a teaser of the new 2018 LEAF’s interior, giving us an idea of what the electric vehicle has to offer. The company released a video...
by - June 25, 2017
The primary suggestion of a 4x4 ute from French company Peugeot was first revealed in 2016. Fifteen months later, the production version is launched. Now, Peugeot is not shying away...
by - June 24, 2017
The new Jaguar E-Pace crossover will soon hold its official launch on July 13 and is expected to arrive at the showrooms by early next year. It couldn’t have come...
by - June 24, 2017
As prices of the original Shelby Cobra have skyrocketed into astronomical proportions, there are firms like Superformance that serve replicas to consumers who demand the same levels of performance at...
by - June 24, 2017
New and improved 2018 Subaru Legacy comes packed with a number of upgraded features from the get go - from the exterior to the interior. And the company has finally...
by - June 23, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries