World and Nation

Chrsyler files for IPO under pressure from second-largest shareholder

DETROIT — Chrysler’s plan for a public stock offering would ordinarily be cause to celebrate the automaker’s comeback from its government bailout and bankruptcy in 2009. But the company’s filing for the offering, which came late on Monday, is hardly a moment of triumph.

Chrysler is taking the step only under pressure from its second-largest shareholder, a trust set up to provide medical coverage for 115,000 retired auto workers and family members. And while the offering would generate needed cash for the trust, it would also thwart plans by Fiat, Chrysler’s Italian parent, to acquire full ownership of the American automaker.

The Detroit automakers have large financial responsibilities to their retirees. On Monday, General Motors said it would raise money in the bond market to buy preferred stock in the company owned by its retiree health-care trust at a cost of $3.2 billion.

Chrysler’s offering arises from an unusual conflict of interests, made possible by the remarkable turnaround at Chrysler since it was shepherded through bankruptcy four years ago by the federal government.

The United Auto Workers health care trust has the legal right to cash in a big chunk of its stake in Chrysler, which today stands at 41.5 percent and is a legacy of a deal brokered in 2009 by the Obama administration’s auto task force. At the time, the deal was seen as a last-ditch effort to save the faltering automaker, while also preserving labor peace with the UAW.

Now, with profits flowing again and the trust in need of cash, it has formally requested that Chrysler register for a public offering covering about 16 percent of the company’s overall shares. The offering is another sign of how Chrysler — as well as General Motors — has recovered since the bailout. In the case of GM, the Treasury Department is continuing to sell off its ownership position, and now owns less than 8 percent of the company’s stock.

The offering, however, is not supported by Sergio Marchionne, the chief executive of both Fiat and Chrysler and the architect of the American company’s revival.

Marchionne is eager to merge the two companies into one international auto giant. And to do so, he needs to acquire the trust’s entire 41.5 percent stake.

But there is a wide gap between what Fiat wants to pay for the shares, and what the trust’s administrators believe they are worth. After months of unsuccessful negotiations, the trust wants to establish the shares’ value in the stock market — and reap a windfall for a portion of its stake.