Four years after it filed for Chapter 11 bankruptcy protection, and was purchased from the depths of bankruptcy court hell by Fiat S.p.A., the circle (jerk) is complete, and thanks to lead underwriter JPM, the second coming of Chrysler, this time for sale to a whole new batch of gullible ROI chasers, is now a fact with the S-1 statement filing moments ago, in which the only cash transfer will be from the VEBA Trust to new shareholders and no new cash will go to the actual company. In other words, the UAW is selling to the general public.
Unlike the vast majority of other recent Dot Com 2.0 public filers for which revenues and certainly profits are merely an afterthouth if they can somehow stuff "mobile advertising", "cloud" and/or "disruptive" at least 500 times in the prospectus, since the Chrysler initial public offering will actually rely on making stuff, not to mention generating profits, this may be a slightly more complicated sell than all other recent filers in a New Normal in which all that matters is spin. That said, we are confident JPM can pull it off.
Some of the highlights from the offering
Use of proceeds:
The selling stockholder [UAW Retiree Medical Benefits Trust, aka the VEBA Trust] will receive all of the net proceeds from this offering, after deducting underwriting discounts and commissions. We will not receive any proceeds from the sale of shares in this offering, including any proceeds from the sale of shares by the selling stockholder pursuant to an exercise by the underwriters of their option to purchase additional shares. See Principal Stockholders and Selling Stockholder for additional info regarding the selling stockholder.
Org Chart pre offering:
And post offering:
Chrysler Group LLC was formed on April 28, 2009, as a Delaware limited liability company. Prior to the Company Conversion described below, the equity interests in us consisted of our Class A Membership Interests held indirectly by Fiat through its subsidiaries and by the VEBA Trust through thirteen holding companies.
Fiat North America LLC was formed on May 14, 2009 as a Delaware limited liability company and 100 percent owned indirect subsidiary of Fiat to hold Fiat’s ownership interest in Chrysler Group LLC. In connection with the closing of the 363 Transaction, Fiat contributed Fiat IP to FNA LLC that were contributed and licensed to Chrysler Group for its use in exchange for a 20.0 percent ownership interest in Chrysler Group.
As of the date of this prospectus, Fiat held a 58.5 percent ownership interest in Chrysler Group and the VEBA Trust held the remaining 41.5 percent. See Management’s Discussion and Analysis of Financial Condition and Results of Operations —Ownership Interest in Chrysler Group.
An admission that there may be artificial pent up demand due to a car age replenishment cycle:
- Economic weakness, including elevated unemployment levels, has at times adversely affected our business, particularly in our principal market, North America. If economic conditions do not continue to improve, or if they weaken, or if unemployment levels do not improve at the same pace as general economic conditions, our results of operations could be negatively affected. Additionally, North American demand for vehicles has steadily increased from 2010; however, that increase may be partially attributable to the average age of vehicles on the road following the sustained downturn from 2007 to 2010 and historically low industry sales in 2011 and 2012. To the extent the increase in vehicle demand is attributable to pent-up demand rather than overall economic growth, future vehicle sales may lag behind improvements in general economic conditions or employment levels.
it's all Venezuela's vault:
- the Venezuelan legislature has recently approved a law, which is awaiting final enactment and publication, that imposes price controls on new and used vehicles in an attempt to slow inflation. Once enacted, the new law would make it unlawful to sell a new or used vehicle above the maximum price set for such vehicle by the Venezuelan government. In addition to the limitation on our ability to access and transfer liquidity out of Venezuela as a result of certain Venezuelan foreign currency exchange regulation, see —Laws, regulations or governmental policies in foreign countries may limit our ability to access our own funds, below, such cap on vehicle prices and the general economic and political instability in Venezuela may significantly limit our ability to continue our existing operations in Venezuela.
Massive pension underfunding:
- Our defined benefit pension plans are currently underfunded. At the end of 2012, our defined benefit pension plans were underfunded by approximately $8.9 billion. Our pension funding obligations may increase significantly if investment performance of plan assets does not keep pace with our benefit payment obligations and we do not make additional contributions to offset these impacts.
And even more massive debt:
- 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, or Revolving Facility. Despite our substantial amount of indebtedness, we may be able to incur significant additional debt, including secured and unsecured debt, in the future. Although restrictions on the incurrence of additional debt are contained in the terms of our $4.3 billion senior secured credit agreement, which includes a tranche B term loan (of which $2.9 billion was outstanding as of June 30, 2013), or Tranche B Term Loan, and the Revolving Facility, collectively referred to as the Senior Credit Facilities, in the indenture governing the secured senior notes due in 2019 and 2021 totaling $3.2 billion (which restricts only secured debt), or the Secured Senior Notes, in the indenture governing our senior unsecured note issued to the VEBA Trust with a face value of $4,587 million, or the VEBA Trust Note, and in our other financing arrangements, these restrictions are subject to a number of qualifications and exceptions