By Natalie Wright and Michelle Sierra
NEW YORK Jan 29 Chrysler Group LLC
set pricing guidance on a $2 billion term loan as part of a $4.7
billion refinancing of the company's VEBA Trust note, sources
The JP Morgan-led loan is split between a $250 million
incremental term loan B that will be combined with the company's
existing term loan B due May 2017, and a new $1.75 billion term
loan B maturing in December 2018. The loans are expected to
price at LIB+275, with a 75bp Libor floor.
Original Issue Discounts (OID) are 99.75 on the incremental
term loan B and 99.5 on the new loan maturing in 2018.
A bank meeting is set for 1 p.m. ET on Thursday to launch
the credit facility that refinances the VEBA note, which was
part of the company's settlement with the United Auto Workers
Union (UAW). The automaker filed for bankruptcy in April 2009.
The package also includes up to $2.7 billion in senior debt
The refinancing follows the completion of Fiat S.p.A.'s
acquisition of Chrysler. Last week, Fiat bought from the VEBA
Trust the remaining 41.5 percent stake in the U.S. automaker
that it did not already own.
Chrysler is requesting lender commitments for the loans by
Chrysler did not comment immediately.
The Voluntary Employees Beneficiary Association Trust note,
also known as the VEBA Trust note, was issued by the automaker
as part of a settlement agreement with the UAW in June 2009. The
senior unsecured note had a face value of $4.587 billion. The
note was slated to back the medical costs of Chrysler's
The loans and the bonds will rank pari passu with Chrysler's
existing secured senior notes and senior secured credit
Fiat's acquisition of the U.S. automaker, finalized on
January 21, consisted of a special distribution paid by Chrysler
Group of $1.9 billion, and a cash payment by Fiat North America
LLC to the VEBA Trust of $1.75 billion. Chrysler Group funded
the special distribution from available cash on hand. Fiat also
funded its $1.75 billion payment from available cash.
Wednesday, Fiat announced that the Board of Directors of
Fiat decided to establish Fiat Chrysler Automobiles N.V.,
organized in the Netherlands, as the parent company. Fiat
Chrysler Automobiles (FCA) common shares will be listed in New
York and Milan.