Fiat Chrysler launches $2.5 billion mandatory convertible bond, share offer

[December 05, 2014]  MILAN (Reuters) - Fiat Chrysler Automobiles (FCA) said on Thursday it had launched an expected share offer and a $2.5 billion mandatory convertible bond as it seeks to reduce its mounting debt pile and fund an ambitious five-year investment plan.

The newly created FCA, which moved its primary share listing to New York in October, wants to invest 48 billion euros ($59.45 billion) by 2018 to turn Jeep, Maserati and Alfa Romeo into global brands. The company hopes to take on Volkswagen and BMW by strengthening its position in the fast-growing and high-margin market for premium cars.

FCA CEO Sergio Marchionne announced the share and bond offers in October, when he also shocked markets with his plan to spin off Ferrari, sell a 10 percent stake via a public offering and distribute the rest of FCA's stake in the luxury sportscar brand to its shareholders.

Marchionne said at the time that all the capital raising measures would inject 4 billion euros into the group.

FCA said in a statement on Thursday it would offer 87 million common shares. That includes treasury shares and stock that will be issued to replace shares that the company bought back, then canceled, from Fiat investors who opposed the recent merger into FCA. The underwriters have the option to purchase up to an additional 13 million shares, it added.

FCA also launched the offering of the $2.5 billion mandatory convertible bond, which matures in 2016. The bond is expected to pay an annual coupon. The underwriters have the option to buy an additional $375 million in mandatory convertible securities.

J.P. Morgan, Goldman Sachs, Barclays, UBS, Citigroup, BofA Merrill Lynch and Morgan Stanley are acting as joint bookrunning managers for both offerings.

FCA's controlling investor Exor, the holding company of the Agnelli family that founded Fiat, said it would participate in the bond issue by purchasing an amount that would protect its stake of around 31 percent from dilution.

Shares in the carmaker closed down 2.5 percent at $13.22. The stock has gained nearly 47 percent since moving its primary listing to New York on Oct. 13 and 36 percent since the Ferrari spin-off was unveiled on Oct. 29.

(1 US dollar = 0.8074 euro)

(Reporting by Agnieszka Flak; Editing by Christian Plumb and Andrew Hay)

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