Chrysler Group filed for an IPO, but apparently is in no hurry to see the initial public stock offering. The company would prefer to buy the shares from the retiree trust fund, but the two sides are unable to agree on a price.
The UAW Retiree Medical Benefits Trust still owns 41.5 percent of Chrysler. Fiat has been trying to buy the shares so it can merge Fiat and Chrysler.The Retiree Trust wants approximately $5 billion for its shares in the company. The company’s filing indicates that the shares would be valued at less than $4 billion.
When the two sides could not agree on terms, the trust demanded that the company start an IPO so it can sell its portion on the open market. This appears to be a negotiating tactic in a high-stakes game of chicken.
In its filing, Chrysler warned that Fiat is unhappy that a stock offering could interfere with a merger. According to the statements Fiat “is considering whether or not to continue expanding the Fiat-Chrysler alliance beyond its existing contractual commitments.” The alliance has been crucial in returning Chrysler to profitability. Many of the new Chrysler models incorporate Fiat designs and platforms.
Chrysler went bankrupt in 2009. Both General Motors and Chrysler were saved through government bail outs. Both GM and Chrysler established VEBAs or Voluntary Employee Beneficiary Associations, to handle retiree health care costs. The VEBAs were given shares in the new companies created after the bankruptcies. General Motors is also in the process of buying back shares of the company from its retiree trust.
The filing does not suggest when an IPO would take place. It does cap the value at $100 million.