Chrysler and UAW Still Hasn't Learned Anything??

[97svtgoin05gt]

http://finance.yahoo.com/news/chrysler-files-ipo-automakers-value-002526072.html

 

If Fiat walks from these guys I'd bet it'll be the end. I can't imagine too many more lives left under that hood.

[Anthony]

First off, it isn't Chrysler behind this.... it's public posturing by the UAW and Marchionne.

 

My thought? It will probably work out in Marchionne's favor in the end anyway (or be a draw). The UAW is gambling on the share prices being high if an IPO happens (or Marchionne upping the offer to forgo an IPO). If they do go forward with an IPO and the value drops below what they expect (like what happened with GM), he can swoop in and grab it at a discounted price.

 

 

Chrysler Group LLC was forced to file paperwork for an IPO by its second-biggest shareholder on Monday, escalating a spat with main owner Fiat SpA (Milan:F.MI -News) which said it could scale back its commitment to the U.S. automaker.

Fiat, which owns 58.5 percent of Chrysler, wants to take full control and buy out the rest of the stock owned by the United Auto Workers trust fund, but has balked at the more $5 billion being demanded.

In response, the UAW trust exercised a right enshrined in Chrysler's 2009 government-financed bankruptcy to go forward with an initial public offering, stepping up pressure on Sergio Marchionne, chief executive of both automakers, to reach a deal.

 

 

Either way, Marchionne is playing the game just as eloquently by saying he might pull out of Chrysler. He won't. He wants Chrysler's cash.

 

This is just seeing who has the bigger wee wee in public.

Edited September 24, 2013 by Intrepidatious

[silvrsvt]

Well what I take from it Fiat isn't really in a position leave Chrysler either...I think the UAW is justified in its wants and don't want to get shafted by Fiat...

[Pioneer]

Bull. Without Chrysler, Fiat is bankrupt. This is posturing by Sergio to get the initial stock price as low as he can. What a tool.

[Anthony]

Well what I take from it Fiat isn't really in a position leave Chrysler either...I think the UAW is justified in its wants and don't want to get shafted by Fiat...

 

 

Agreed. They want the most they can get out of it and Marchionne wants to pay as little as possible. Pretty much like any other transaction anywhere. They are just haggling on a global stage.

[Ovaltine]

This is a game of BIG stakes poker, being played here.

 

This is the key part of the article that the UAW is eyeing:

 

"Under Marchionne, Chrysler has mounted an unlikely comeback that has pushed its valuation to around $10 billion, according to some analyst estimates. The U.S. automaker is now propping up Fiat's bottom line, rather than the other way around. Chrysler's success has complicated Marchionne's efforts to buy out the fund. The more than $5 billion price tag pushed for by adviser Brock Fiduciary represents the highest possible payout under the terms of the bankruptcy agreement."

 

Who's going to blink first?

 

-Ovaltine

Edited September 24, 2013 by Ovaltine

[Anthony]

This is a game of BIG stakes poker, being played here.

 

This is the key part of the article that the UAW is eyeing:

 

"Under Marchionne, Chrysler has mounted an unlikely comeback that has pushed its valuation to around $10 billion, according to some analyst estimates. The U.S. automaker is now propping up Fiat's bottom line, rather than the other way around. Chrysler's success has complicated Marchionne's efforts to buy out the fund. The more than $5 billion price tag pushed for by adviser Brock Fiduciary represents the highest possible payout under the terms of the bankruptcy agreement."

 

Who's going to blink first?

 

-Ovaltine

 

 

Sounds so familiar doesn't it?

 

 

 

The difference being that I don't think Marchionne wants to bleed Chrysler dry (like Daimler did). I think he just wants to rule the world and Chrysler is just a cog in his big wheel (entry to the NA market).

Edited September 24, 2013 by Intrepidatious

[Anthony]

P.S. Who do you think is behind the wording of the IPO press release? Who wants to devalue the share price should it go public? Who wants to scare off potential investors?

 

Pay special attention to paragraph 2, which basically says "If you guys would just leave us alone and let Fiat buy us, everything would be peachy"

 

 

 

“Fiat has informed us that it is evaluating the various potential impacts that a public offering and the consequential introduction of public stockholders may have on its views of the Fiat-Chrysler Alliance, and as such, is considering whether or not to continue expanding the Fiat-Chrysler Alliance beyond its existing contractual commitments. If Fiat becomes unwilling to work with us beyond the scope of its existing contractual obligations, there may be a material adverse effect on our business prospects, financial condition and results of operations.”

 

“Further, Fiat has expressed its desire to acquire all of our outstanding equity or otherwise create a simplified, unified capital structure through the acquisition of the minority ownership in us held by the VEBA Trust, a portion of which will be sold in this offering. Completion of this offering will prevent or delay Fiat from meeting this objective, and Fiat has stated that it believes a publicly-traded Chrysler Group will prevent or delay the full realization of the benefits of the Fiat-Chrysler Alliance. Fiat has informed us that it is reconsidering the benefits and costs of further expanding its relationship with us and the terms on which Fiat would continue the sharing of technology, vehicle architectures and platforms, distribution networks, production facilities and engineering and management resources.”

 

“Following the completion of this offering, Fiat will continue to own a majority of our equity. Fiat will have the ability, should it choose to do so, to sell some or all of its shares of our common stock in a privately negotiated transaction or in capital markets offerings pursuant to its registration rights. … if Fiat were to sell a sufficiently large portion of its interest in us, such a transaction could result in a change in control of us, which could also trigger an event of default under certain of our debt agreements. … Additionally, if Fiat privately sells a significant equity interest in us, we may become subject to the control of a presently unknown third party.”

 

“Among the most significant regulatory changes we face over the next several years are the heightened requirements for fuel economy and GHG emissions. CAFE provisions under EISA mandate that, by 2025, car and truck fleet-wide average fuel economy must be materially higher than that required today. … This increased scrutiny could have an effect on the fuel economy ratings of certain of our vehicles, which, in turn, could affect our consumer perception and sales … A disruption of Fiat’s supply of such vehicles, or of technology or powertrains, to us could have an effect on the model year average fuel economy ratings of our fleet, which, in turn, could affect consumer perception of our company and our sales.”

 

“Unlike most of our competitors who operate and control affiliated finance companies, we do not have a finance company dedicated solely to our operations. … On May 1, 2013, Santander Consumer USA Inc., or SCUSA, began serving as our private-label financing provider under the Chrysler Capital brand name and managing retail and wholesale financing needs for our dealers and retail customers following the termination of our relationship with Ally Financial Inc., or Ally, in April 2013. Our decision to transition our financing services relationship to SCUSA and to develop a private-label financing solution subjects us to significant risks, particularly in the short term as SCUSA ramps up its operations to serve the financing needs of our dealers and retail customers.”

“Product recalls also harm our reputation and may cause consumers to question the safety or reliability of our products. For example, we estimate that we will incur costs of $151 million in connection with a voluntary safety recall for the 1993-1998 Jeep Grand Cherokee and the 2002-2007 Jeep Liberty and a customer satisfaction action for the 1999-2004 Jeep Grand Cherokee, both of which we initiated following a recall request from NHTSA related to the risk of fuel tank fire from rear impact collisions.”

 

“At the end of 2012, our defined benefit pension plans were underfunded by approximately $8.9 billion.”

 

“We have a substantial amount of indebtedness. As of June 30, 2013, our total debt, including the debt of our subsidiaries, was $13.7 billion (based on the outstanding principal balance of such indebtedness), excluding undrawn commitments of $1.3 billion under our revolving credit facility.”

Edited September 24, 2013 by Intrepidatious

[RichardJensen]

Dear Sergio,

 

Still haven't figured out how the US media works yet, have you?

 

Sincerely,

 

Capt. Obvious (ret.)

Edited September 25, 2013 by RichardJensen

[J-150]

Sergio thumping his chest again. He seems to do this every 6 months or so.

[jpd80]

The funny thing is that the UAW is trying to get the best deal possible and the threat of an IPO is normally enough

to get someone who really wants that stock to start negotiating - the UAW want $1 more compared to the offer.

Surely both sides are closer to an agreement than the media posturing suggests..

 

everything is high drama with Sergio... remember the shyster loans comment that Sergio flung

at the US and Canadian governments and then withdrew...well this is the same IMO...

Cool heads will prevail.

Edited September 27, 2013 by jpd80