Why does everyone say that Fiat is "buying" Chrysler???

Discussion in 'General Motoring' started by MoPar Man, Jun 9, 2009.

  1. MoPar Man

    MoPar Man Guest

    So Fiat gets 3 seats on the board, the UAW gets one (and it can't
    vote). How many voting seats in total does the new board have, and who
    gets them?

    BTW, I heard this morning that Fiat does not plan to walk away on June
    15 if this deal isin't done by then.


    UAW Gets Majority Stake, No Control Over Chrysler-Fiat Deal

    Union hopes to sell off its 55% stake – if anyone will buy.
    by Michael Strong on May.05, 2009

    The UAW becomes the majority stakeholder but a minority voice if the
    Chrysler-Fiat deal is ultimately approved by the bankruptcy court.

    With his usual dry delivery, United Auto Workers President Ron
    Gettelfinger told a room full of reporters, Monday evening, just how
    much control the UAW’s health-care trust would have over the new
    Chrysler. Zip, nada, zilch.

    “The board seat we’ve been given has no votes,” he said with a sarcastic

    Gettelfinger and other senior UAW officials met with local bargaining
    unit leaders in Sterling Heights, Michigan, today to provide them with
    an update on the status of Chrysler’s bankruptcy proceedings.

    The UAW healthcare trust would receive a 55% stake in a new Chrysler,
    but no voting role on the board on which it would hold just one seat,
    according to a plan filed with a U.S. Bankruptcy Court Sunday. The plan
    aims to grease the skids for a quicker hook up with Italy’s Fiat SpA -
    which will get three seats.

    Call it the new corporate math. Under the plan approved by the Treasury
    Department, and now facing court scrutiny, Fiat would hold a 20% stake
    in the new Chrysler, but effectively take control. Fiat Chief Sergio
    Marchionne is expected to lead the new venture. The U.S. government
    would control 8% and the Canadian and Ontario governments together would
    hold 2%.

    Subscribe to TheDetroitBureau.comGettelfinger said the Voluntary
    Employee Beneficiary Association, a health-care trust that is exchanging
    debt-for-equity in the new company, is accepting a lot of risk under the
    plan, and will be stressed by the deal. He also used the forum to push
    aside complaints from a group of lenders alleging that the UAW is
    getting preferential treatment under the plan.

    “If the UAW’s been treated (preferentially), let’s just take a look at
    the facts. We are trading debt-for-equity and what is the value of the
    equity of what we’re getting today? Let’s be honest, it’s zero today.
    The VEBA is going to be very stressed because of the agreement we’re
    under here,” Gettelfinger emphasized.

    The VEBA was created as part of the 2007 contract talks between Chrysler
    and the UAW (with similar benefit programs created for Ford Motor
    Company and General Motors Corporation). The idea was to shift
    responsibility for managing the domestic industry’s huge health care
    liabilities to the union - and off of the books of the troubled Big
    Three — financial engineering not unlike the kind that led to the Great

    But when the U.S. auto industry began to melt down, in mid-2008, the
    promising program suddenly didn’t look like such a good idea, at least
    for the suddenly cash-strapped automakers, and in recent months, they’ve
    been pressing to swap equity for the promised cash contributions. In
    the case of Chrysler, health care obligations total $10.9 billion for
    82,000 workers and retirees. But now the VEBA will have just $1.5
    billion in cash, with the promise of another $300 million contribution
    from Chrysler, next year.

    “The VEBA will be on life support initially,” said the union chief,
    noting that some cuts in retiree benefits will be required. “We took a
    lot of risks here.”

    There is a potential upside. If Chrysler recovers, the stock could
    increase sharply in value, something that happened after the automaker
    was bailed out by Washington in 1981. But there are plenty of doubters
    who question whether history will repeat itself.

    The union, of course, has to hope for the best outcome, and Gettelfinger
    said the VEBA will sell off its equity in the new Chrysler as soon as it
    can- that is, if anyone will be interested in buying.

    “As you can see, as soon as the VEBA’s in a position to where we can
    sell stock, we will be required to sell stock in order to keep the
    benefits going,” Gettelfinger said. Left unsaid was another option,
    adjust the benefits to the VEBA’s income from dividends.

    While not focusing on General Motors, he said he expected the current
    Chrysler plan would be used as a blueprint for a GM bankruptcy filing,
    if it came to that. However, Gettelfinger declined to speculate further
    since he felt the outcome for GM could still be dramatically different.

    He again dismissed the notion that the UAW was playing puppet-master in
    its dealings with the two automakers: now and in the future.

    “People can say whatever they want. For us, we’re in the same position
    we were when before we got into this from the standpoint of our control
    over anything. Obviously we’ve worked very closely with the companies
    over the years,” Gettelfinger said. “We don’t design vehicles, we don’t
    engineer vehicles, we don’t make decisions on where to put product, we
    don’t make marketing decisions…those kind of things don’t belong to us,
    never have and they don’t now.”
    MoPar Man, Jun 9, 2009
  2. MoPar Man

    News Guest


    News Alert
    7:24 PM EDT Tuesday, June 9, 2009

    Supreme Court Clears Way for Sale of Chrysler to Fiat

    High Court rejects delay sought by Indiana pension funds.
    News, Jun 10, 2009
  3. MoPar Man

    MoPar Man Guest

    If Fiat is "buying" Chrysler, then what are they paying for it?

    What is the price?

    And how many voting seats in total will the Chrysler board have?
    MoPar Man, Jun 10, 2009
  4. MoPar Man

    News Guest

    Fiat Said to Buy Chrysler Assets Tomorrow to Form New Automaker

    By Mike Ramsey and Lizzie O’Leary

    June 9 (Bloomberg) -- A group led by Fiat SpA will probably complete its
    purchase of most Chrysler LLC assets tomorrow, after the U.S. Supreme
    Court rejected creditors’ objections and cleared the way for a new U.S.
    automaker, said two people familiar with the matter.

    If not tomorrow, the sale will close on June 11, said one of the people,
    who asked to not be identified because the matter is private.

    The new company, Chrysler Group LLC, will be owned 20 percent by Turin,
    Italy-based Fiat, 9.85 percent by the U.S., 2.46 percent by Canada and
    67.69 percent by a United Auto Workers union retiree health care trust
    fund. The U.S. and Canadian governments financed the sale with $2 billion.


    Fiat will run Chrysler and can eventually increase its stake to 51
    percent by meeting certain operating milestones with Chrysler, along
    with option purchases. Fiat Chief Executive Officer Sergio Marchionne
    will hold the same post at Chrysler and serve on the nine-member board
    along with Chairman Robert Kidder, former Exxon Mobil Corp. Vice
    Chairman Lucio Noto and Alfredo Altavilla, a Fiat executive. The five
    other directors haven’t been named.


    For Chrysler employees, the alliance means the third set of owners in
    less than two years, after spending the past 21 months under the control
    of private-equity firm Cerberus Capital Management LP. Cerberus bought
    Chrysler from DaimlerChrysler AG for $7.4 billion in August 2007.

    The sale transfers to the new company substantially all of Chrysler’s
    operations and excludes eight manufacturing sites, dozens of pieces of
    real estate, equipment leases and contracts with 789 U.S. auto dealerships.

    The assets left behind will be sold off under court supervision with the
    proceeds to be distributed to creditors with claims against Chrysler LLC.
    News, Jun 10, 2009
  5. MoPar Man

    miles Guest

    This is getting absurd! Every day a new report comes out and states
    something entirely different than a day earlier. Yesterday a report on
    CNN stated Fiat will start out with a 25% stake and could increase it to
    35%. Today a report says up to 51%. I've also seen many other figures
    stating how much the UAW has.

    Doesn't really matter. The US Government seems to hold the power to
    tell them what cars to make, which dealerships to close etc. The WH
    should stay out of it. Sad day when the WH controls private industry.
    miles, Jun 10, 2009
  6. MoPar Man

    MoPar Man Guest

    What is the price?

    When you buy something, you usually have to give the seller some money.
    There is something called a "price". It is a numerical quantity,
    measured in terms of a local currency, usually preceeded with a
    character such as "$".

    I see no reference to a price in these stories regarding Fiat
    "purchasing" Chrysler.

    And how is all this sitting with Daimer? Not a peep out of them. ?
    MoPar Man, Jun 10, 2009
  7. MoPar Man

    News Guest

    FIAT is willing to invest management's scarce time and attention.


    And they may invest further over time to achieve a 51% stake.

    Screw Dr. Z, and Cerberus, too.
    News, Jun 10, 2009
  8. MoPar Man

    News Guest

    Worse days, most of the past eight years.
    News, Jun 10, 2009
  9. MoPar Man

    CopperTop Guest

    As I understand. . .Chrysler is not a public company so they don't have
    to make puclic any info including what they are being sold for. But if
    we the taxpayers are footing the bill, we should get some sort of info.
    CopperTop, Jun 10, 2009
  10. MoPar Man

    miles Guest

    Just wait. The current WH is on a roll to control private industry and
    destroy capitalism. Government is a huge source of our problems and yet
    people are willing to have them take even greater control. Government
    is the problem, not the solution. The WH should not be calling the
    shots and basically running auto manufactures. They have no clue how to
    do so. Let the people decide what cars they wish manufactures to
    produce rather than the WH dictate it.
    miles, Jun 11, 2009
  11. MoPar Man

    News Guest

    Fine. Please wait with Cheney in your undisclosed, secure location.
    News, Jun 11, 2009
  12. MoPar Man

    Some O Guest

    What is the price?

    When you buy something, you usually have to give the seller some money.
    There is something called a "price". It is a numerical quantity,
    measured in terms of a local currency, usually preceeded with a
    character such as "$".

    I see no reference to a price in these stories regarding Fiat
    "purchasing" Chrysler.

    And how is all this sitting with Daimer? Not a peep out of them. ?[/QUOTE]

    It appears the price for Fiat is their sharing of their new
    technologies, particularly their MultiAir engine technology, with the
    New Chrysler.
    Some O, Jun 15, 2009
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