At closing of the Transaction, NewCo will assume the corporate name of Chrysler and become the owner of substantially all the Chrysler’s business without certain debts and liabilities. At closing NewCo will issue in favor of Fiat an equity interest equal to 20% (by vote and value) on a fully diluted basis and Fiat will enter into certain industrial agreements with Chrysler. Similarly, at closing the Voluntary Employee Benefit Association (VEBA) will be issued an equity interest equal to approximately 55% on a fully diluted basis of Chrysler. Such equity interest will be administered by the U.S. Treasury. UST and the Canadian Government will collectively hold the remaining 10% equity interest (on a fully diluted basis). The new Chrysler will also benefit from the recently agreed new collective bargaining agreements with UAW and CAW and of a facility of the U.S. Treasury of
approximately US $ 6.5 bn. The new Chrysler will be managed by a board of directors consisting of
directors: three directors will be appointed by Fiat. One of Fiat’s appointees must satisfy the criteria for independence under the New York Stock Exchange listing rules. VEBA and the Government of Canada will have the right to appoint one Director respectively. U.S. Treasury will have the right to make the initial appointment of four directors (three of whom must be independent). Fiat will have right to receive up to an additional 15% equity interest (by vote and value) on a fully diluted basis. This stake can be obtained in three tranches of 5% each subject to the achievement of predetermined targets, in particular, achievement of regulatory approvals to produce the FIRE family of engines in the USA; achievement of sales of Chrysler vehicles outside NAFTA, and achievement of regulatory approval to produce a Chrysler model based on Fiat technology. Upon obtainment of such additional 15% interest, Fiat will also have the right to appoint another director of Chrysler. In addition, Fiat will be granted an option to acquire an additional 16% shareholding
(exercisable from Jan 1, 2013 until June 30, 2016).
The price of such incremental
equity will be determined in accordance to certain market standards but in any event will not exceed the then Fiat market multiple. This option will not be exercisable while the US Treasury outstanding loan exceeds US$3 billion. Fiat’s shareholding will be capped at 49% until Chrysler has repaid in full the loan granted by the U.S. Treasury.
3. Fiat s contribution
Fiat will contribute key technology and other resources to Chrysler. In summary, the Fiat Contributions will consist of the following: licenses enabling Chrysler to use all Fiat Group Automobiles car platforms (and subject to any