Chrysler could list after trust demand

Chrysler, the US’s third-largest carmaker by volumes, could return to public listing for the first time in five years after the fund that owns 41.5 per cent of its shares exercised its right to demand that the company register a stake for listing.

Chrysler, controlled by Fiat, Italy’s largest carmaker by volumes, said on Wednesday that the UAW Retiree Medical Benefits Trust had demanded the company register a 16.6 per cent stake for public listing.

The demand marks the latest stage in a tussle between the UAW trust – a union-founded fund also known as the Veba Trust – over how to value Veba’s Chrysler stake.

Veba is seeking a court ruling over how much Fiat should have to pay to add a 6.6 per cent tranche that Veba controls to the 58.5 per cent stake that Fiat currently holds.

Sergio Marchionne, chief executive of both Fiat and Chrysler, is seeking to merge Chrysler and Fiat and has said he would prefer not to relist Chrysler. But the company said on Wednesday that it would comply with the Veba demand.

Veba made its demand under the 2009 shareholder agreement struck when Fiat and Veba jointly acquired control of Chrysler as it exited a short period in bankruptcy.

Chrysler has had no public listing since 2008, when Daimler, the German carmaker, sold it to Cerberus, the private equity firm, to break up the troubled, merged Daimler Chrysler. The company was last independently listed in 1998, before Germany’s Daimler-Benz bought it.

Brock Fiduciary Services, the Veba trust’s independent manager, declined to discuss its request.

“We respect the process and will be making no public statement,” it said.

Any listing is likely to be a lengthy process because Chrysler’s current corporate structure as a limited liability company is poorly suited to public listing. There is also the strong possibility that Fiat and Veba will resolve their disagreement over the price for Veba’s shares and the request will lapse.

Chrysler is the third-biggest of the US’s domestic automakers by annual sales, behind General Motors, the market leader, and Ford, the number two. However, it increased its American sales 21 per cent last year – far faster than the general market growth of 13 per cent – as improved quality, products and costs made it far more competitive than before the 2009 bankruptcy.