Chrysler Amends IPO Filing, Highlighting Fiat Conflicts

Chrysler Group LLC, the automaker controlled by Fiat SpA, amended its initial public offering registration statement yesterday, adding details and altering some characterizations.

The filing, for example, no longer describes Chrysler’s history of product introductions as “successful,” and said that the Jeep Cherokee, which began production in June, began shipping to dealers in late October, later than planned.

The automaker also added definitions of what it means when describing vehicles as “new” or “significantly refreshed,” and gave data to illustrate improvements in production quality. Chrysler also said it saved about $450 million through joint purchasing with Fiat, which was “slightly lower” than estimated in its 2010-2014 business plan.

Sergio Marchionne, chief executive officer of Chrysler and Fiat, its majority owner, has been working for four years to combine the two companies into an automaker better able to compete globally with the likes of General Motors Co. (GM), Volkswagen AG (VOW) and Toyota Motor Corp. (7203) Fiat owns 58.5 percent of Chrysler and wants to acquire the rest from the United Auto Workers’ retiree health-care trust, which acquired the stake during Chrysler’s 2009 bankruptcy.

Marchionne finds himself in the position of running the company that’s being listed and also the controlling shareholder that’s opposed to the IPO. Chrysler acknowledges the CEO’s awkward role in the share sale preparation, saying in the filing that he and other executives “may have conflicts of interest with respect to matters involving both companies.”

Gualberto Ranieri, a Chrysler spokesman, declined to comment yesterday.

Forced IPO

The health-care trust forced the IPO last month in a move that may ultimately help resolve a dispute between it and Fiat (F) over the value of the Auburn Hills, Michigan-based carmaker.

The shares are being offered by the trust, which owns the 41.5 percent of Chrysler not held by Turin-based Fiat.

The trust, a voluntary employee beneficiary association, is seeking a price for its Chrysler stake that is at least $1 billion more than Fiat wants to pay.

Marchionne said last month that the UAW’s trust “should buy a ticket for the lottery” if it wants to get at least $5 billion for its holding. Fiat has the right to buy the entire stake for $4.25 billion, plus 9 percent annual interest calculated from January 2010. The trust received the holding as part of Chrysler’s government-backed bankruptcy in 2009.

Fiat started accumulating Chrysler stock in June of that year as part of the government bailout of the U.S. carmaker, which was losing as much as $100 million a day at the time. Rather than paying cash for the initial 20 percent holding and subsequent 15 percent stake, Fiat provided management experience and technology and helped Chrysler meet various performance milestones, such as developing models.

To contact the reporter on this story: Mark Clothier in Southfield, Michigan at mclothier@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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