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:

Pin It

Comments

Recommended

It’s quite safe to say that this generation marks the rise of the electric cars. For the past few years, automakers have been very busy trying to find the perfect...
by - March 28, 2017
Want to go for a sportier look, but don’t have enough cash to burn? Good news for future Ford Edge buyers, as the 2018 model year will have an optional...
by - March 28, 2017
Audi refreshes its portfolio as its go-faster division officially announces the release of six new RS models by the end of 2018. That’s quite a huge number of cars to...
by - March 28, 2017
Has Toyota started the production of a new electric supercharger? Well, a patent that was recently published indicated that they might have. And this electric supercharger looks more durable and...
by - March 27, 2017
The Tesla Model S has finally arrived in South Korean soil and is now available for test drive. But, there’s a catch. You’ll have to wait several months if you...
by - March 27, 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