The trust responsible for paying the health-care costs of some union retirees of Chrysler Group LLC faces $3 billion in unfunded obligations as it works to get the most for its 41.5% stake that Fiat wants.
The trust’s benefit obligations narrowed by $414.9 million to $13.4 billion during 2012, according to its amended 2012 financial statement. At the same time, the net value of its assets rose to $10.3 billion, driven mostly by an increase in the estimated value of its 41.5 percent stake in Auburn Hills, Michigan-based Chrysler.
While the shortfall was reduced from more than $5 billion a year earlier, the trust needs to maximize the value of its Chrysler holdings to cover the projected cost of retirees’ health care. Unable to agree on a price with Sergio Marchionne, the chief executive officer of Chrysler and Fiat, the union trust last month forced him to file for a Chrysler initial public offering.
Marchionne has been trying to merge the two companies for four years to help create an automaker with the scale to compete globally. The process of setting a value in the public offering may end the stalemate that has kept the two sides from reaching a deal that combines the two automakers.
More than a third of the value of the trust’s assets is in Chrysler stock, according to the filing, which listed $3.6 billion in joint venture interests, up from about $2.7 billion a year earlier. The trust provided health-care coverage for 61,214 people at the end of 2012, compared with 63,171 a year earlier.
The trust, which is structured as a voluntary employee beneficiary association, or VEBA, received its Chrysler holding as part of the automaker’s 2009 government-financed bankruptcy that gave control of the company to Fiat.
Fiat SpA – Chrysler CEO Sergio Marchionne is seeking greater integration between the two units, as well as access to Chrysler’s $11.9 billion in cash to fund an expansion of the Alfa Romeo brand.
) - Monday, October 21st, 2013 - filed under Chrysler
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