(Reuters) - The union-affiliated healthcare trust that is the minority owner of Chrysler Group LLC will have until November 5 to respond to a suit filed by majority owner Fiat SpA, according to a court filing in Delaware on Wednesday.
The minority owner, a retiree healthcare trust affiliated with the United Auto Workers, and Fiat disagree on the pricing of a 3.32 percent stake in Chrysler to be transferred to Fiat from the healthcare trust.
Fiat last month sued the trust, known as a Voluntary Employees Beneficiary Association (VEBA), when the trust did not, in July, sell Fiat the share of Chrysler at a price using a formula agreed when Chrysler emerged from its government-supported bankruptcy in 2009.
The suit was filed in a state court in Delaware.
The trust is looking to maximize the value of its Chrysler stake but Chrysler contends that the pricing of the 3.32 percent tranche was set by a formula in the 2009 agreement, when the mere survival of Chrysler was in question.
Last week, Sergio Marchionne, chief executive of both Fiat and Chrysler Group, said he hoped that the issue would be resolved by the end of the year.
Fiat owns 58.5 percent of Chrysler and the VEBA trust owns 41.5 percent.
The 2009 bankruptcy agreement allows Fiat to exercise a call option to purchase 3.32 percent of Chrysler every six months beginning July 2012. This call option offer expires June 30, 2016.
The 2009 agreement says that Fiat may buy up to 16 percent of the VEBA's 41.5 percent stake every year, in half-year tranches from the second half of 2012 to the first half of 2016. That works out to 3.32 percent of Chrysler every half year.
If Fiat were to take advantage of every chance to buy 3.32 percent of Chrysler every six months through June 30, 2016, it would increase its ownership of Chrysler by 26.56 percent to 85 percent of the company.
Marchionne has also said that Fiat will be filing for another tranche in January, and indicated that it is in Fiat's best interest to seek to exercise the call options at a price set up when Chrysler was on its last legs in 2009.
Marchionne said that the merger of Fiat and Chrysler was progressing despite the lawsuit.
As Chrysler emerged from bankruptcy, Fiat took over management control of the company and got a 20 percent stake. Since, Chrysler has turned from money-loser to a profit center for its parent Fiat.
For this year's second quarter, Fiat reported a loss of 246 million euros (US $322.5 million) while Chrysler reported a profit of $436 million (333 million euros) and said it would show a 2012 operating profit of at least $3 billion (2.3 billion euros).
"When we signed the damn thing in 2009 it was clear," Marchionne told reporters on October 8 in Columbus, Ohio. "Today, now that things have changed and we're making some money" VEBA and Fiat disagree on how the six-month tranches should be priced, he said.
Fiat sued VEBA in September after VEBA did not sell the Italian automaker 3.32 percent of Chrysler in July after Fiat filed for the call option, according to an 11-page suit filed with the Court of the Chancery of Delaware on September 26.
The Italian automaker wanted to pay $139.7 million (106.6 million euros) for the stake in Chrysler, a figure reached, Fiat says, by using the 2009 pricing formula.
(In paragraph 4, this story corrects to show lawsuit was filed in Delaware state court, not federal court)
(Reporting By Bernie Woodall in Detroit and Tom Hals in Delaware; Editing by Steve Orlofsky; Editing by David Gregorio)