Chrysler Files For IPO
- Category: Detroit
- Published on Tuesday, 24 September 2013 01:09
- Written by The Michigan Chronicle
- Hits: 87
Chrysler Group filed for an initial public offering on Monday, potentially setting the stage for the automaker's return to the public market.
The shares being sold in the proposed offering come from the stake of a trust established to cover medical benefits for retired workers that now owns 41.5% of the company.
The trust was set up in 2007 as a way of reducing Chrysler's financial burden of paying these health care costs. It was never supposed to have a large share of its assets in the form of a privately held stock, but with Chrysler running out of cash the following year and falling into bankruptcy in 2009, the only asset it could offer was its own stock.
Similar trusts were set up at General Motors (GM, Fortune 500) and Ford (F, Fortune 500) as the U.S. auto industry reeled during the economic downturn. GM announced plans Monday to to repurchase 120 million preferred shares from its trust.
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The price range and number of shares in the Chrysler offering haven't yet been determined. The company's registration document with the Securities and Exchange Commission indicated that the trust would continue to hold a stake after its sale of shares to the public.
The offering is being led by JPMorgan (JPM, Fortune 500).