Fiat exercises the first tranche of VEBA call option, will hold 61.8% of Chrysler
03 July 2012
Fiat has notified VEBA—Voluntary Employee Beneficiary Association, a UAW administered trust established to pay health care benefits for retirees from Chrysler—of Fiat’s exercise of its option to purchase a portion of the interest held in Chrysler by VEBA. Following the consummation of the purchase, expected to occur in the upcoming weeks, Fiat will hold 61.8% of the outstanding equity in Chrysler.
Since June 2009, Fiat has held an option to purchase 40% of VEBA’s interest in Chrysler; the option may be exercised from 1 July 2012 until 30 June 2016, semi-annually, in tranches not exceeding, for each exercise, 20% of the Covered Interest.
This exercise for the initial tranche of Chrysler equity covered by the call option agreement represents approximately 3.3% of Chrysler’s outstanding equity. Fiat will pay an exercise price for such purchase in accordance with the parties’ agreement that is determined based on a market multiple (not to exceed Fiat’s multiple) applied to Chrysler EBITDA for the most recent four quarters less net industrial debt.
Separately, Chrysler Group LLC reported June 2012 US sales increased 20%, reflecting its best June sales in 5 years.
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