Fiat Chrysler launches a convertible bond issue and a share sale
Fiat Chrysler achieved its highest stock price since the automaker’s creation back in October after CEO Sergio Marchionne formally launched a $2.5 billion convertible bond issue and a share sale in order to fund its ambitious investment plan and take a chunk out of its debt pile, according to Reuters.
The newly created company, which moved its primary share listing to New York City back in October, intends to invest €48 billion ($59 billion) over the course of five years in order to turn Jeep, Maserati, and Alfa Romeo into global brands. Automotive News says that the company hopes to challenge Volkswagen and BMW by strengthening its position in the rapidly-growing and exceptionally lucrative premium cars market.
The Italian-American automaker’s stock rose as much as 2.7% to $13.58, the highest intraday figure since the stock’s mid-October debut. Holders of the mandatory convertible bond will be entitled to Ferrari stock when Fiat Chrysler distributes 80% of the division to investors in 2015. The mandatory convertible notes will be due in 2016, according to The Wall Street Journal.
“All eyes are on Fiat Chrysler’s mandatory convertible bond, as it allows investors to get their hands on Ferrari shares,” said Vincenzo Longo, a strategist at IG Markets, told Businessweek over the phone. “We expect very high demand for Marchionne’s financing package, as shown by an extra slice reserved for underwriters.”