Fiat Chrysler closes $3 billion bond offering; will repay other debt
Fiat Chrysler Automobiles NV on Tuesday closed its previously announced $3 billion bond offering.
The closure comes less than a week after the automaker initially declared the offering of unsecured senior bonds and two days before the automaker's annual shareholders meeting in Amsterdam.
Proceeds from the offering, according to the company, may be used to repay or refinance outstanding debt of the former Chrysler Group LLC, now known as FCA US LLC — a fully-owned subsidiary of Fiat Chrysler.
FCA US debt totaled $12.8 billion to end 2014, up $500 million from the previous year. The increase was primarily due to the company refinancing bonds in connection to gaining full control of Chrysler from a United Auto Workers union trust fund that owned 41.5 percent of the automaker as a result of its 2009 bankruptcy.
Fiat Chrysler said it sold $1.5 billion in bonds at a 4.5 percent rate that are payable on or before 2020. The other $1.5 billion was at a 5.25 percent interest rate that are payable on or before 2023.
Following completion of the offering, the company said FCA US took steps to notify bond holders that next month it will pay off bonds due in 2019.
According to its 2014 annual report, FCA US had $10.9 billion in loans and secured senior notes due through 2021: $3.1 billion due in 2017; $1.7 billion due in 2018; $2.9 billion due in 2019; and $3.2 billion due in 2021. It also had another $1.9 billion in other financial liabilities.
Fiat Chrysler CEO Sergio Marchionne has said he would like to pay off the debt of FCA US debt as soon as possible to lift restrictions on how the company can allocate its capital.
For 2015, Fiat Chrysler expects shipments of 4.8 million-5 million cars and trucks, up from 4.6 million in 2014; net income of 1 billion-1.2 billion euro ($1.14 billion-$1.36 billion); earnings before interest payments and income taxes (EBIT) in the range of 4.1 billion-4.5 billion euros ($4.6 billion-$5.1 billion); and net revenue of 108 billion euros ($122.7 billion).
"We will work towards the achievement of these targets with the same spirit that has brought us this far and with respect for the diversity of experiences and cultures that coexist, both inside and outside the Group," Marchionne said in a letter as part of the automaker's 2014 annual report.
During the annual shareholder meeting, officials are scheduled to discuss the annual report and re-appoint executive and non-executive directors as well as other routine business operations.