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Union Trust Presses Chrysler to Move Toward IPO
The union-run retiree healthcare trust that owns 41.5% of Chrysler Group LLC has demanded that the company start the process of launching an initial public offering.
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The union-run retiree healthcare trust that owns 41.5% of Chrysler Group LLC has demanded that the company start the process of launching an initial public offering.
Doing so would establish a price for the trust's remaining Chrysler stock. That could resolve a dispute between the trust (the United Auto Workers union's Voluntary Employee Beneficiary Assn.) and Fiat SpA about the value of the VEBA's shares.
Fiat, which already owns 58.5% of Chrysler, has said previously it would prefer to directly buy the VEBA's entire stake, thus enabling a full merger of the two automakers by 2015.
Since last July Fiat has had the option to buy as much as 16.6% of Chrysler from the VEBA in small increments every six months. But the two have been unable to agree on a price.
The trust now insists that Chrysler register 270,800 shares, or 16.6% of the company's total equity, with U.S. securities regulators. The terms of Chrysler's 2009 restructuring give the VEBA the right, starting this month, to require the company to begin the IPO process.
Chrysler vows to comply with the restructuring pact. But the company nonetheless offers "no assurance" it will file a registration or hold an IPO.
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