Fiat Chrysler to spin off Ferrari, issue $2.5 billion convertible bond
By Agnieszka Flak
MILAN (Reuters) - Fiat Chrysler Automobiles (FCA) (FCAU.N: Quote) said on Wednesday it will spin off its luxury sports car maker Ferrari and list the shares as part of a bigger scheme which includes a $2.5 billion convertible bond issue to help fund its ambitious business plan.
The newly created FCA, which moved its primary share listing to New York earlier this month, wants to invest 48 billion euros ($61 billion) over the next five years to turn Jeep, Maserati and Alfa Romeo into global brands and rival Volkswagen (VOWG_p.DE: Quote) and BMW (BMWG.DE: Quote) by strengthening its position in the fast-growing and high-margin market for premium cars.
As part of the capital-boosting measures announced on Wednesday FCA will also sell by the end of 2014 up to 100 million of its shares -- including treasury shares and stock that will be issued to offset a share buyback from Fiat investors who opposed the recent merger into FCA -- and repay ahead of maturity some Chrysler bonds to remove restrictions on its access to the cash of the U.S. unit, whose buyout it completed earlier this year.
"Today is a big clean-up day," FCA's chief executive Sergio Marchionne said, adding that together, all the measures would inject a total of 4 billion euros into the company and help it deal with any eventual contraction in car sales volumes.
"It gives us all the comfort to go and execute the plan up to 2018, it is designed to deal with the worst-case scenario," he said.
Under the plan FCA said it will list a 10 percent stake in Ferrari in the United States and possibly in Europe through a public offer, hoping to complete the spin-off next year.
The remaining 80 percent stake held by Fiat Chrysler will be distributed to FCA shareholders, including Fiat's founding Agnelli family which controls 30 percent of FCA.
The other 10 percent of Ferrari is owned by Piero Ferrari, vice chairman and son of the founder Enzo, who died in 1988. Continued...