The US subsidiary of Fiat Chrysler Automobiles NV, the seventh-largest automaker in the world, FCA US has recently announced it moved to redeem some senior secured notes that were due for maturity in 2019.
The total value of the redeemed senior secured notes that were due in 2019 reaches $2.875 billion, according to a filling with US market regulator SEC. The North American division of the automaker, formerly known as the Chrysler Group LLC has been the backbone of the carmaker almost immediately after Italy’s Fiat SpA saved it from the US-managed bankruptcy in 2009. The slump in Europe and weakness in Latin America, traditional strongholds for Fiat made the US manufacturer a crucial asset – even providing the financial backup when the Italian company bought its final stake in Chrysler last year. Ever since, chief executive officer Sergio Marchionne has been mulling for further consolidation across the global auto players, in a bid to secure a partnership of purchase that would allow it to fulfill its ambitious growth strategy.
The recently redeemed senior secured notes carried a coupon of 8 percent, and the redeem was done at a price equal to their principal amount, with the associated premium and any accrued or unpaid interests on top. FCA now needs to refinance all of Chrysler’s past bonds and credit agreements in order to gain full access to its cash reserve. FCA still has bonds due in 2021 and other credit agreements, but once available the US unit’s money would become a crucial boost for the five-year investment strategy that would see expenses of 48 billion euros.