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:


Login or Create new account to add a comment!


Many have been excited with the impending arrival of the next-generation Jeep Wrangler and the new 2019 Jeep Grand Wagoneer, which is slated to be the brand’s new range-topping model....
by - October 21, 2016
Chevrolet has taken the wraps off its new Chevrolet Colorado ZH2 at the fall meeting of the Association of the United States Army (AUSA). Tagged as the most extreme fuel-cell-powered...
by - October 21, 2016
Honda has unveiled the fifth generation of its hot-selling SUV – the 2017 Honda CR-V. The latest iteration of the CR-V should help it maintain its benchmark status in the...
by - October 21, 2016
Many are already expecting BMW to launch an ultra luxurious SUV that will serve at its new flagship by late 2018. Larger than the X5 and X6, the new X7...
by - October 21, 2016
Most of you may have heard or already have one of those autonomous home appliances doing the house chores. Thus, it’s not anymore unusual to see a car going places...
by - October 20, 2016