Fiat Chrysler Automobiles, the seventh-largest automaker in the world needs to gather more cash in order to reduce its growing debt figures and support an ambitious five-year investment plan.
The company – which was established recently after Italy’s Fiat SpA merged with the third-biggest US automaker Chrysler Group LLC – announced yesterday the start of an expected share offer and a $2.5 billion mandatory convertible bond. Back in October the company, which has a Dutch registration and London global headquarters, moved its primary share listing to New York (the secondary remained in Milan, Italy) and then subsequently announced it would spin off its most iconic brand – luxury sports car manufacturer Ferrari.
Fiat Chrysler Automobiles NV seeks to invest 48 billion euros ($59.45 billion) by 2018 to transform Jeep, Maserati and Alfa Romeo into global brands. Without giving up on its traditional mass-market brands (Fiat, Chrysler. etc.), FCA hopes it would strengthen its global position and – most of all – financial power by competing with Volkswagen AG’s luxury brands or BMW and Mercedes in the fast-growing and high-margin premium segment.
When first announcing the plans for the share and bond offers, FCA chief executive Sergio Marchionne forecast the capital raising measures would end up bringing around 4 billion euros to the group.