Chrysler IPO not likely until 2012: Marchionne

TOLEDO, Ohio Fri Jun 3, 2011 4:45pm EDT

Sergio Marchionne, Chrysler Group LLC. Chief Executive Officer, speaks during a news conference at the Chrysler Casting Plant in Etobicoke May 30, 2011. REUTERS/Mike Cassese

Sergio Marchionne, Chrysler Group LLC. Chief Executive Officer, speaks during a news conference at the Chrysler Casting Plant in Etobicoke May 30, 2011.

Credit: Reuters/Mike Cassese

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TOLEDO, Ohio (Reuters) - A public share offering for Chrysler Group LLC is more likely to occur in 2012 than this year because the automaker needs a longer track record of performance, the company's chief executive said on Friday.

Sergio Marchionne, who is also the CEO of Italian automaker Fiat SpA (FIA.MI), added that Chrysler is looking for the equity markets to improve if it eventually goes ahead with an initial public offering.

"I see no benefit in a 2011 IPO," Marchionne told reporters after an appearance by President Barack Obama at a Chrysler plant in Toledo, Ohio.

"A lot of it depends on how receptive the markets are and performance and what could be raised," he said. "My gut would suggest no earlier than 2012."

Last year, Marchionne said an IPO was possible for the second half of 2011, but in recent months he has suggested the time frame could change.

Marchionne's statement on Friday is the clearest sign yet that an IPO would be pushed back.

An IPO of Chrysler would allow the VEBA, a healthcare trust affiliated with the United Auto Workers union, to cash out of its position in the company.

The VEBA, which currently owns 45.7 percent of Chrysler, is in no rush to sell and is looking to get the best possible return, two sources familiar with the matter said.

Marchionne said he had not yet started talks with the officials of the VEBA.

"They're not an investment fund, they need to set aside obligations for their retirees," Marchionne said. "I expect to work with them to find a way to allow them to exit at the right time. But neither Chrysler nor Fiat is going to get pushed into a position. They will do it when it's ready."

As part of the Treasury deal, Fiat will pay $75 million for Treasury's option to buy all shares held by the VEBA trust.

Marchionne said a share offering would still be possible if Fiat were to buy that interest but that Chrysler did not need to go public if Fiat bought the VEBA and Canada stakes.

Though he added that an IPO is still the easiest way for the VEBA to sell its stake.

Last year, General Motors Co (GM.N) launched an IPO that helped cut the stake held by the U.S. Treasury.

"We'd have a third automaker out of Detroit back in the capital markets," Marchionne said. "Ford (F.N) and GM are there. It would be good if Chrysler was back too."

OBAMA CREDITS REPAYMENT

Obama was at the Chrysler plant to hail the U.S. automaker's progress and the government's exit from the company's affairs six years ahead of schedule.

Last week Chrysler repaid its government loans and the U.S. Treasury announced on Thursday it had reached a deal to sell its 6 percent equity interest in Chrysler to Fiat for $500 million.

"What you've done has vindicated my faith," Obama told an audience of workers at the Toledo plant, which makes Jeeps.

The decision to rescue Chrysler was far from unanimous within the Obama administration, which put the company into bankruptcy with the help of billions in taxpayer assistance.

Fiat's stake in Chrysler will rise to 52 percent from 46 percent when the Treasury sale is completed. Additionally, Fiat is in talks with Canada to buy its 1.7 percent equity stake in Chrysler.

Marchionne said he would extend a deal to Canada that was similar to the one struck with the U.S. government.

Separately, Chrysler said it had appointed Alessandro Gili, 39, as chief accounting officer. He joined from Fiat Group Automobiles SpA, where he was head of accounting.

Gili replaced Ronald Elder, who remains with the company in a senior finance position.

(Editing by Robert MacMillan, Phil Berlowitz)

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