According to a couple of people with knowledge of the situation, Fiat SpA is now revising a move to sell around 1.5 billion euros ($2.05 billion) in mandatory convertible bonds.
The move would be made to lower the debt it made when it cashed out to acquire the remainder of its US subsidiary – Chrysler Group LLC. The two people, who declined to be identified because the matter is still private, said that Fiat Chrysler Automobiles NV – the new company formed from the merger of Fiat to Chrysler – would issue to banks a bond convertible into shares.
“The most likely option is a mandatory convertible; that has the advantage of being issued at a premium to the share price,” Massimo Vecchio, an analyst with Mediobanca in Milan, wrote in a note to clients. “However, the group has several funding options,” including giving away a stake in Ferrari or Maserati, he added.
Chief Executive Officer Sergio Marchionne also discussed last month the fact that the company will hold payment of dividends to keep the cash flow running after it paid $4.35 billion to acquire the rest of the Chrysler shares.