VEBA Pushes Chrysler Take Step Towards IPO image

Chrysler’s minority owner, VEBA, demanded the automaker to register shares with US regulators, a first step for the car maker to become a public company.

Wednesday, January 9th, VEBA, a United Auto Workers union retiree healthcare trust, demanded that Chrysler should register 16.6% of the automaker’s shares with the U.S. Securities and Exchange Commission. The 2009 agreement, which brought Chrysler out of bankruptcy, allows the minority owner to make such a demand.

Analysts believe that there will be no public offering, and that this is just a plan of the healthcare trust to force Fiat’s hand in valuing the US automaker’s shares, currently contested in a Delaware court. The 2009 bankruptcy agreement gives Fiat the right to buy a 3.3% stake in Chrysler every six months until the maximum of 16.6%.

“The IPO ain’t gonna happen,” said Richard Hilgert, an analyst at Morningstar. “VEBA wants to get a pricing on the 16.6 percent so that they can take it to court and say ‘this is the market price.'”

Currently Fiat owns 58.5% in Chrysler and VEBA the rest of 41.5%. Fiat and Chrysler’s CEO Sergio Marchionne previously declared that he plans to merge the two companies by 2015. Fiat values Chrysler’s shares at $4.2 billion, VEBA at $10.3 billion, while analyst Richard Hilgert values it at $13.6, in a report published in May.

“When we signed the damn thing in 2009 it was clear,” Marchionne said in October, referring to the pricing formula for the value of Chrysler shares. “Today, now that things have changed and we’re making some money” VEBA wants not to adhere to the formula, he said.