The trust responsible for paying the health-care costs of some union retirees of Chrysler Group LLC faces $3 billion in unfunded obligations as it works to get the most for its stake that Fiat SpA wants to buy.
The benefit obligations of the voluntary employees beneficiary association trust narrowed by $414.9 million to $13.4 billion during 2012, according to the VEBA's amended financial statement. At the same time, the net value of its assets rose to $10.3 billion, driven mostly by an increase in the estimated value of its 41.5% stake in Auburn Hills, Mich.-based Chrysler. Fiat owns the other 58.5 %.
While the shortfall was reduced from more than $5 billion a year earlier, the trust needs to maximize the value of its Chrysler stake to cover the future cost of retirees' health care. Unable to agree on a price with Sergio Marchionne, the CEO of Chrysler and Fiat, the trust last month forced Mr. Marchionne to file for a Chrysler initial public offering.
Mr. Marchionne has been working for four years to merge Chrysler with Fiat to create an automaker better able to compete globally with the likes of General Motors Co., Toyota Motor Corp. and Volkswagen AG. The process of setting a value in the public offering might end the stalemate that has kept the two sides from reaching a deal that combines the two automakers.
Katie Merx, a Chrysler spokeswoman, declined to comment. Matt Wood, a spokesman for the trust, didn't immediately respond to an e-mail seeking comment.
More than a third of the value of the Chrysler trust's assets is in its ownership stake of the automaker, according to the filing, which listed $3.6 billion in joint venture interests, up from about $2.7 billion a year earlier. The trust provided health-care coverage for 61,214 people at the end of 2012, compared with 63,171 a year earlier.
Another trust, representing GM retirees, was underfunded by $14.5 billion at the end of 2012, down from $18.9 billion a year earlier, according to its amended filing. The Ford retirees' trust hasn't amended its statement yet.