Fiat Chrysler Automobiles NV, a company that has embarked on a highly ambitious plan to increase sales and grow its profit fivefold, has decided to spin off its luxury supercar division Ferrari.
But before that happens – according to FCA chief executive officer Sergio Marchionne – during the second or third quarter of 2015, Ferrari is going to pay its parent Fiat Chrysler Automobiles around 2.25 billion euros. The cash, about $2.8 billion, is expected by FCA to come from transactions executed before the planned spin off. Last month, Marchionne – now also Ferrari’s chairman (he will keep the position when the carmaker becomes independent), announced that FCA has decided to spin off the iconic supercar producer from the main group – 10% of the shares would be sold through an initial public offering, 10% would remain with the Ferrari heir and the rest of 80% would be distributed equally among Fiat Chrysler’s investors.
London based FCA said in a US filling that the company plans to enter “into certain other transactions including distributions and transfers of cash from Ferrari currently estimated at 2.25 billion euros,” and is another move in the current strategy to gain $5 billion to lower debt. The plan also includes the issue of a $2.5 billion convertible bond – with FCA needing as much cash as possible to develop models and brands to pursue its goal of taking up the likes of Toyota, VW and GM.
Via Bloomberg, Reuters