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Ferrari borrows $2.6 billion to finance FCA spinoff

Ferrari announced Monday that it is borrowing about $2.6 billion to finance its spinoff from Fiat Chrysler Automobiles. Here's how it breaks down: Ferrari NV, the automaker's parent company based in the Netherlands, is taking out loans totaling 2.5 billion euros. That's equivalent to $2.64 billion at current exchange rates, and is divided between a term loan of $2.12 billion and a revolving credit facility of $529 million. The larger term loan "will be used to refinance indebtedness owing to Fiat Chrysler Automobiles," among other purposes. That ought to constitute the lion's share of the $2.38 billion which the Prancing Horse marque was, according to reports last year, slated to pay its current parent company in order to help FCA fund its ambitious growth plans. The separate line of credit is earmarked "to be used from time to time for general corporate and working capital purposes of the Ferrari group." Though Ferrari is not expected to take any other Fiat Chrysler properties with it, the "group" in this case would include its various financial services and distribution arms around the world that may have been separately incorporated. As noted in the statement below, the financial arrangement "represents a further step towards the separation of Ferrari from the FCA Group," following the separate stock issues from both companies as independent from each other. FERRARI N.V. SIGNS ˆ2.5 BILLION SYNDICATED CREDIT FACILITY Ferrari N.V. (NYSE: RACE) ("Ferrari") announced today that it has entered into a ˆ2.5 billion syndicated loan facility with a group of ten bookrunner banks. The facility comprises a bridge loan (the "Bridge Loan") and a term loan (the "Term Loan") of ˆ2 billion in aggregate and a revolving credit facility of ˆ500 million (the "RCF"). Proceeds of the Bridge Loan and Term Loan will be used to refinance indebtedness owing to Fiat Chrysler AutomobilesN.V. (NYSE: FCAU) ("FCA") and other indebtedness and for other general corporate purposes. Proceeds of the RCF may be used from time to time for general corporate and working capital purposes of the Ferrari group. The Bridge Loan has a 12 month maturity with an option for Ferrari to extend once for a six-month period. Ferrari intends to refinance the Bridge Loan prior to its maturity with longer term debt, including through capital markets or other financing transactions. The Term Loan, which comprises a majority of the total facility, and the RCF each have a maturity of five years.

FCA and PSA sign merger agreement

Confirming an earlier rumor, PSA Group and Fiat-Chrysler Automobiles (FCA) signed a binding merger agreement to create the world's fourth-largest automaker. The partners hope to leverage the benefits of economies of scale as they develop new technologies and expand their global presence. The announcement ends FCA's years-long search for a partner, which nearly ended earlier in 2019 when it came close to merging with Renault, PSA's rival. It brings Fiat, Chrysler, Dodge, Ram, Jeep, Alfa Romeo, Maserati, Lancia, Peugeot, Citroen, DS, and Opel/Vauxhall under the same roof. That's a huge portfolio of brands that often overlap, but executives pledged to keep them all open, as well as all their respective factories as a result of the transaction. They're committed to making this big family of automakers work by building on each one's strengths, whether they're technical or regional. FCA and PSA jointly predicted they'll sell about 8.7 million cars annually around the globe, while posting an ˆ11 billion (about $12.2 million) profit. North America, a strong market for FCA, will provide 43% of its revenues, and 46% will be generated in Europe, where Peugeot's brands are doing better than ever. Together, they plan to achieve ˆ3.7 billion (about $4.1 million) in annual run-rate synergies. They'll notably have the purchasing power to negotiate a better price with suppliers, and they'll merge their research and development efforts where it makes sense to do so. Over two thirds of the group's annual volume will be built on two shared platforms. One will underpin about three million small cars annually, and the other will serve as the foundation for approximately three million compact and mid-sized cars. Details about these architectures haven't been made public yet, but a quick look at both companies' product portfolios reveals the small car will very likely come from Peugeot. Recent additions to its range, like the second-generation 208, are built on a new architecture named Common Modular Platform (CMP) developed with electric powertrains in mind. Meanwhile, Fiat is still making the cheeky 500 on an evolution of the platform found under the second-generation Panda released in 2003. The bigger architecture could come from FCA, however. The group's brands will share engines, transmissions, electric powertrains, infotainment systems, various sensors used to power electronic driving aids, and other components like wiring looms, but each one will retain its own identity.

Fiat Chrysler will pay $70M to settle safety disclosure suit

FCA US will pay a $70 million civil penalty to the National Highway Traffic Safety Administration for failing to submit Early Warning Report data going back to 2003. The automaker will also provide any missing data since that time, and an auditor will monitor future compliance. NHTSA says the failures to report this information "stem from problems in FCA's electronic system for monitoring and reporting safety data, including improper coding and failure to account for changes in brand names." There are no allegations of any intentional deception by the automaker. NHTSA will wrap up the latest fine with the previous consent order against FCA US earlier this year for the automaker's handling of 23 recalls. The company will know owe the safety regulator a total of $140 million in cash, and there will be possibility of $35 million more in deferred penalties if FCA doesn't comply with the agency's requests. In a statement about the fine to Autoblog, FCA US said the automaker "accepts these penalties and is revising its processes to ensure regulatory compliance." The company strongly believes that it didn't miss any safety problems over the time with this problem. Early Warning Reports include information on deaths, injuries, crashes, and other potential safety concerns, and NHTSA often uses the data in investigations for possible recalls. In September, the safety agency first announced the automaker failed to submit these documents. At the time, the regulator's administrator Mark Rosekind promised to "take appropriate action after gathering additional information on the scope and causes of this failure." FCA US also released a statement then about the lapse and said the company notified NHTSA immediately after discovering the problem. FCA US is not the first company to run afoul of NHTSA's reporting requirement. The agency fined Triumph Motorcycles and Honda this year for similar lapses. It also punished Ferrari in 2014. U.S. DOT Fines Fiat Chrysler $70 million for Failure to Provide Early Warning Report Data to NHTSA WASHINGTON – The U.S. Department of Transportation's National Highway Traffic Safety Administration has imposed a $70 million civil penalty on Fiat Chrysler Automobiles (FCA) for the auto manufacturer's failure to report legally required safety data. The penalty follows FCA's admission in September that it had failed, over several years, to provide Early Warning Report data to NHTSA as required by the TREAD Act of 2000.