USA - FIAT agrees terms with UAW to take control of Chrysler Group

FIAT S.p.A. (“FIAT”) today announced an agreement with the VEBA Trust[1], under which its wholly owned subsidiary, FIAT North America LLC (“FNA”), will acquire all of the VEBA Trust’s equity membership interests in Chrysler Group LLC (“Chrysler Group”), representing the 41.4616% of Chrysler Group not currently held by FNA.  The transaction is expected to close on or before January 20, 2014.

In consideration for the sale of its membership interests in Chrysler Group, the VEBA Trust will receive aggregate consideration of U.S. $3,650 million consisting of:

• a special distribution payable by Chrysler Group to its members, in an aggregate amount of approximately U.S.$1,900 million (FNA’s portion of the special distribution will be paid by FNA to the VEBA Trust as part of the purchase consideration)[2]; and
• at closing, FNA will pay the remainder of approximately U.S.$1,750 million in cash purchase consideration to the VEBA Trust.

FIAT expects to fund the U.S. $1,750 million in cash from available cash on hand.  Chrysler Group expects to fund the special distribution from available cash on hand.

Contemporaneously with the transactions described above, Chrysler Group and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (the “UAW”) have agreed to a memorandum of understanding under Chrysler Group’s existing collective bargaining agreements to provide for additional contributions by Chrysler Group to the VEBA Trust of an aggregate of U.S. $700 million in four equal annual installments.  The initial payment will be made on closing of the transaction with FIAT and additional payments will be payable on each of the next three anniversaries of the initial payment. Chrysler Group expects to fund the initial contribution to the VEBA Trust from available cash on hand.

In consideration for these contributions, the UAW will agree to certain commitments to continue to support the industrial operations at Chrysler Group and the further implementation of the FIAT-Chrysler alliance, including to use best efforts to cooperate in the continued roll-out of FIAT-Chrysler World Class Manufacturing programs, actively participate in benchmarking efforts associated with implementation of these programs across all of FIAT-Chrysler manufacturing sites to ensure objective performance assessments and provide for proper application of WCM principles, and actively assist in the achievement of the Group’s long-term business plan.

“I have been looking forward to this day from the very moment that we were chosen to assist in the rebuilding of a vibrant Chrysler back in 2009,” said John Elkann, Chairman of FIAT. “The work, commitment and achievement I have witnessed from Chrysler over the past four and a half years is nothing short of exceptional, and I take this opportunity to officially welcome each and every one of the people in the Chrysler organisation to the integrated FIAT-Chrysler world.”

Sergio Marchionne, Chief Executive of FIAT and Chairman and CEO of Chrysler Group, had this to say: “In the life of every major organisation and its people, there are defining moments that go down in the history books. For FIAT and Chrysler, the agreement just reached with the VEBA is clearly one of those moments. I will be forever grateful to the leadership team for the support and unwavering dedication shown to the integration project that today has taken its final shape. The unified ownership structure will now allow us to fully execute our vision of creating a global automaker that is truly unique in terms of mix of experience, perspective and know-how, a solid and open organisation that will ensure all employees a challenging and rewarding environment.”

As part of the transactions, FNA and the VEBA Trust will agree to dismiss with prejudice the current proceedings before the Delaware Court of Chancery with respect to the interpretation of the call option agreement pursuant to which FIAT has, through FNA, exercised three tranches of a call option to acquire membership interests in Chrysler Group held by the VEBA Trust.  All of these membership interests will be acquired by FNA in connection with the transactions described above.

Given the funding arrangements for this transaction, it is not envisioned that FIAT will require equity capital to be raised via a rights issue.

[1] The UAW Retiree Medical Benefits Trust, a Voluntary Employees’ Beneficiary Association, is an independently administered trust established to pay health care benefits for retirees from Chrysler.

[2] In the event that the special distribution from Chrysler Group cannot be paid by the intended closing date (January 20, 2014 or earlier) FIAT intends to make payment to the VEBA Trust of the aggregate consideration and thereafter receive the special distribution when it is the 100% owner of Chrysler Group.

DATSUN GO, the car to mobilise a new generation

• Datsun is back; new Datsun GO unveiled in New Delhi, India.
• Datsun GO is the first Datsun car for the 21st century.
• Developed locally, Datsun GO will also be locally produced.
• Datsun is the third Nissan Motor Company's brand.
• Datsun stands for Dream, Access and Trust (D.A.T.).

DELHI, India – Datsun today unveiled the first new Datsun car for the 21st century. The all-new Datsun GO will be on sale in India in early 2014.

The Datsun GO is the realization of the commitment made by Nissan Motor Co., Ltd. in March 2012 to return the Datsun brand to the marketplace. Datsun is the third brand for the Nissan Motor Company along with the company's Nissan and Infiniti brands. Datsun will play an important role in the Nissan Power 88 mid-term business plan.

“This is an historic day for Nissan Motor Company and for our customers and partners in some of the world's fastest-growing markets. It's also an exciting moment for many women and men here in India who – today – come one step closer to realizing the dream of purchasing a car," said Carlos Ghosn, Nissan Motor President and CEO, when unveiling the car.

The five-door, front-wheel drive hatchback will come with a 1.2-liter engine paired with a five-speed manual transmission that offers optimal response time and agility in congested traffic.

With comparatively compact body dimensions (width – 1635mm; height – 1485mm; length– 3785mm), the car is spacious inside thanks to a wide stance and large wheelbase (2450mm), and offers ample headroom and an expanded front seating configuration. It will be a reliable partner for families, providing comfort to five occupants and agility in congested traffic.

For those customers never wanting to part with their favorite music and pictures Datsun GO will offer a very practical solution – Mobile Docking Station to connect with their smartphones.

Datsun GO is expected to be “a category up" in its price range, attractively priced below INR 400,000, or £4400 GBP or $6700 USD (based on current exchange rates, fluctuations, taxes and local requirements may mean price increases)

This all-new car has been built to meet the needs of recent rising group of optimistic customers in high-growth markets who seek better value propositions. These are people who want transportation that supports their everyday needs, but that also fulfills their dreams and ambitions for a better tomorrow. They are literally “on the move." They want to GO further, so the name of the car reflects this aspiration.

The name of the new car is inspired by the first Datsun, the DAT-GO, launched almost a century ago in Japan. Back then the cars brought mobility to people who had never dreamed of car ownership before. The reignited Datsun brand and the Datsun GO will bring a similar combination of aspiration and trustworthiness.

Datsun GO is high quality, stylish and modern, delivering an engaging driving experience. The overall Datsun customer offer will include a worry-free ownership experience, competitive total cost, accessible services, with transparent pricing, and dealership proximity.

“When a customer buys his first new car in countries like India, Indonesia, Russia and South Africa, first he dreams about it. To realize the dream, customers need to have access, feel a sense of belonging towards the Brand. Also, as this purchase will represent a significant part of their disposal income, it is important for them to have full trust in the brand and the product. So Dream, Access and Trust are key values for which the Datsun brand stands now," said Vincent Cobee, who leads Datsun.

Datsun models will be individually developed for different markets, but the concept will follow a common inspiration. Datsun GO will be the first of several Datsun models that will be launched later in 2014 in Indonesia, Russia and South Africa.

While Nissan Motor's Global design center in Japan was responsible for the Datsun GO styling, R&D and engineering development for the project were entrusted to local engineering resources and suppliers to ensure the product would suit local market conditions, preferences, tastes and needs, and would be accessible in terms of price and supply. The project development was of course backed by the full assurance of the global Japanese car manufacturer's accumulated expertise and quality assurance.

Datsun GO will be produced at one of the newest Renault-Nissan Alliance factories at Oragadam, in Chennai.