Chrysler may delay stock offering

Associated Press / March 31, 2011

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TURIN, Italy — Fiat and Chrysler chief executive Sergio Marchionne suggested yesterday that Chrysler may delay its initial public offering depending on the cash needs of the US automaker and the auto workers union trust fund.

Marchionne has previously hinted that an IPO could happen by the end of the year.

He said a decision on whether and when to take Chrysler public would depend on how much the automaker itself and the United Auto Workers health care trust, which pays health benefits for retirees and holds a 63.5 percent share in Chrysler, need liquidity.

“If those two needs are not there, then the IPO of Chrysler may or may not become relevant,’’ Marchionne said after a Fiat shareholders meeting.

But he added: “It is rational, maybe reasonable, to expect that there will be an IPO. It can’t be done very quickly. We just filed with the SEC, we’re still working our way through the comments. We have to get ready to be a public company again, and issuing securities takes time. We should do it properly.’’

Fiat SpA, which took over management of Chrysler 21 months ago, increased its stake in the once-bankrupt automaker, Detroit’s third largest, to 25 percent this year. Marchionne confirmed that Fiat expects to raise it to 35 percent by the end of the year. At that point, it could go even further and raise its stake to majority 51 percent stake if Chrysler repays loans to the US and Canadian governments.

Marchionne said Fiat had other options for further increasing its stake beyond 51 percent — including the possibility to acquire an additional 8 percent stake from the US Treasury, he said. Treasury owns 9.2 percent of Chrysler while the Canadian government holds another 2.3 percent.

Marchionne also said that Chrysler production will probably be “negatively impacted’’ by the supply chain problems created by the tsunami and earthquake in Japan earlier this month.

Marchionne told shareholders earlier that the two automakers potentially could generate combined revenues of $141 billion by 2014.

Fiat SpA, which got an initial 20 percent stake in return for small-car technology and management know-how, is in the process of relaunching Chrysler with a series of new model launches.

Chrysler has targeted sales of 2 million cars in 2011. Marchionne was sticking by the target despite delays in production.