merkhet Posted October 29, 2014 Share Posted October 29, 2014 I'm wondering if the two-year bar would still apply to the tax-free nature of a spin. What two-year bar? There are various rules that negate the tax-free characteristics of a spin-off if there's a change of control within two years of the spin-off. Link to comment Share on other sites More sharing options...
gokou3 Posted October 29, 2014 Share Posted October 29, 2014 I'm wondering if the two-year bar would still apply to the tax-free nature of a spin. What two-year bar? There are various rules that negate the tax-free characteristics of a spin-off if there's a change of control within two years of the spin-off. I tend to think there won't be a change of control regardless since the controlling shareholder of Fiat will still own a significant portion (30%?) of Ferrari -- unless they want to sell, of course. Link to comment Share on other sites More sharing options...
karthikpm Posted October 29, 2014 Share Posted October 29, 2014 What does the board think Ferrari is worth? Morningstar says about 6 dollars/share Link to comment Share on other sites More sharing options...
merkhet Posted October 29, 2014 Share Posted October 29, 2014 I think somewhere between $5.60 to $8.00 per Fiat share for the 80% that will be spun off to shareholders. Link to comment Share on other sites More sharing options...
karthikpm Posted October 29, 2014 Share Posted October 29, 2014 http://www.businessinsider.com/heres-everything-you-need-to-know-about-fiat-chrysler-spinning-off-ferrari-2014-10 Link to comment Share on other sites More sharing options...
plato1976 Posted October 29, 2014 Share Posted October 29, 2014 what's the conversion share price? Jay is referencing the $2.5 billion in mandatory convertible securities announced today. Link to comment Share on other sites More sharing options...
sleepydragon Posted October 29, 2014 Share Posted October 29, 2014 Interesting perspective from a member on the Ferrari Chat Forum: http://www.ferrarichat.com/forum/ferrari-discussion-not-model-specific-sponsored-algar-ferrari/466064-fiat-spin-off-ferrari-2.html From the perspective of Ferrari owners, the issuance of 10% of the shares is essentially meaningless. This was simply done to set a market price for the 90% of shares to be spun off to the shareholders. The REAL ISSUE is the issuance of $2.5 billion of convertible bonds, the proceeds of which will go to Fiat. Unless and until those bonds convert, Ferrari's cash flow is largely going to be dedicated to paying the interest on those bonds instead of developing its street cars and its racing program. Why does this 2.5 bn bond have anything to do with Ferrari? If I read the annoucement correctly, it says the bond issuance is contingent upon the Ferrari spin off completion. agree. the bond has nothing to do Ferrari. with the bond and ipo, fiat is suddenly not that leveraged, a major concerns of sell side analysts. also, it's a "mandatory bond", which is almost like a stock, with low yield. bond holder essentially is long the stock, selling a ATM call , and long a otm call. at conversion, if the stock is higher than now, they issue less shares Link to comment Share on other sites More sharing options...
sleepydragon Posted October 29, 2014 Share Posted October 29, 2014 http://www.businessinsider.com/heres-everything-you-need-to-know-about-fiat-chrysler-spinning-off-ferrari-2014-10 "In a statement Fiat said investors participating in the $2.5 billion mandatory convertible bond issuance would be entitled to participate in the spin-off and receive shares of Ferrari." Is this correct? I searched Fiat's official releases, and nowhere I found they say this. Link to comment Share on other sites More sharing options...
sleepydragon Posted October 30, 2014 Share Posted October 30, 2014 34.5 million Treasury shares on 1.25 billion shares outstanding is basically a rounding error. And the 2.5 billion convert? Probably 10% dilution? http://www.fcagroup.com/en-US/media_center/fca_press_release/FiatDocuments/2014/october/FCA_Board_Authorizes_Capital_Transactions.pdf U.S.$2.5 billion in aggregate principal amount of mandatory convertible securities are expected to be offered in an SEC-registered offering to U.S. and international institutional investors. The mandatory convertible securities will be mandatorily convertible into FCA common shares at maturity. The interest rate, conversion rates and other terms and conditions of the mandatory convertible securities will be determined at pricing of the offering. It is expected that investors participating in the offering, subject to completion of the spin-off of Ferrari being announced today, will be entitled to participate in the spin-off and receive shares of Ferrari pursuant to customary provisions adjusting the conversion terms. Unclear right now -- we'll have to wait until we get more information. I'd love to see Marchionne & Elkann pull a Malone here. Issue a bunch of mandatorily convertible preferreds and then hedge out the dilution since no one believes they can get to the strike anyway. the above says if I buy the convert bond, I will be entitle to the Ferrari shares. But as a fiat shareholder, and if I don't buy the convert bond, I amgetting the ferrari shares too, right? Link to comment Share on other sites More sharing options...
merkhet Posted October 30, 2014 Share Posted October 30, 2014 34.5 million Treasury shares on 1.25 billion shares outstanding is basically a rounding error. And the 2.5 billion convert? Probably 10% dilution? http://www.fcagroup.com/en-US/media_center/fca_press_release/FiatDocuments/2014/october/FCA_Board_Authorizes_Capital_Transactions.pdf U.S.$2.5 billion in aggregate principal amount of mandatory convertible securities are expected to be offered in an SEC-registered offering to U.S. and international institutional investors. The mandatory convertible securities will be mandatorily convertible into FCA common shares at maturity. The interest rate, conversion rates and other terms and conditions of the mandatory convertible securities will be determined at pricing of the offering. It is expected that investors participating in the offering, subject to completion of the spin-off of Ferrari being announced today, will be entitled to participate in the spin-off and receive shares of Ferrari pursuant to customary provisions adjusting the conversion terms. Unclear right now -- we'll have to wait until we get more information. I'd love to see Marchionne & Elkann pull a Malone here. Issue a bunch of mandatorily convertible preferreds and then hedge out the dilution since no one believes they can get to the strike anyway. the above says if I buy the convert bond, I will be entitle to the Ferrari shares. But as a fiat shareholder, and if I don't buy the convert bond, I amgetting the ferrari shares too, right? Yes. Link to comment Share on other sites More sharing options...
argonaut Posted October 30, 2014 Share Posted October 30, 2014 See this part here: "...and a distribution of FCA’s remaining Ferrari shares to FCA shareholders . " here is full link: http://www.fcagroup.com/en-US/media_center/fca_press_release/FiatDocuments/2014/october/FCA_Announces_Board_Intention_to_Spin_Off_Ferrari_S_p_A_.pdf Link to comment Share on other sites More sharing options...
Phaceliacapital Posted October 30, 2014 Share Posted October 30, 2014 http://www.exor.com/dms/05_Media/01_Comunicati_Stampa/2014/16_CS_29102014/CdA-Exor_prestito-FCA_en/CdA%20Exor_prestito%20FCA_en.pdf 600mn from Exor. Link to comment Share on other sites More sharing options...
muscleman Posted October 30, 2014 Share Posted October 30, 2014 http://www.exor.com/dms/05_Media/01_Comunicati_Stampa/2014/16_CS_29102014/CdA-Exor_prestito-FCA_en/CdA%20Exor_prestito%20FCA_en.pdf 600mn from Exor. The fact that Exor invested in the convertible bonds makes it impossible to be a John Malone type of deal. Does anyone know what will happen to my cost basis after the spin off? I have an average cost basis of 7.1, so if Ferrari is distributed to me for more than 7.1 per share, will my fiat cost basis become negative? Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted October 30, 2014 Share Posted October 30, 2014 http://www.exor.com/dms/05_Media/01_Comunicati_Stampa/2014/16_CS_29102014/CdA-Exor_prestito-FCA_en/CdA%20Exor_prestito%20FCA_en.pdf 600mn from Exor. The fact that Exor invested in the convertible bonds makes it impossible to be a John Malone type of deal. Does anyone know what will happen to my cost basis after the spin off? I have an average cost basis of 7.1, so if Ferrari is distributed to me for more than 7.1 per share, will my fiat cost basis become negative? I don't think a negative cost basis is in the cards. I don't do much investing in taxable accounts so I rarely worry about this. It was my understanding the company will instruct you how to calculate this and that the cost basis is split proportionally between the parent and the spin off so as to avoid any tax implication. Link to comment Share on other sites More sharing options...
fareastwarriors Posted October 31, 2014 Share Posted October 31, 2014 Ferrari Agrees to $3.5 Million U.S. Fine on Death Reports http://www.bloomberg.com/news/2014-10-31/ferrari-fined-3-5-million-by-u-s-for-failure-to-report-deaths.html Link to comment Share on other sites More sharing options...
krazeenyc Posted October 31, 2014 Share Posted October 31, 2014 any news causing this spike right now? Link to comment Share on other sites More sharing options...
zizou Posted October 31, 2014 Share Posted October 31, 2014 the spinoff is expected to complete by mid-2015. that said, what do folks think fair value is for the each FCAU share? Is $20 achieavable by eoy? sergio's road show should get investors keen on picking up shares in anticipation of getting ferrari shares. Link to comment Share on other sites More sharing options...
muscleman Posted October 31, 2014 Share Posted October 31, 2014 any news causing this spike right now? Could be a short squeeze. All of my FCAU shared were lent out by IB since they listed in NYSE. The interest rate jumped from 0.96% to 1.9% and kept increasing every day. I guess some lousy hedge funds shorted FCAU and longed F without thinking with their brains, and now they are getting burned. Link to comment Share on other sites More sharing options...
sleepydragon Posted October 31, 2014 Share Posted October 31, 2014 any news causing this spike right now? Could be a short squeeze. All of my FCAU shared were lent out by IB since they listed in NYSE. The interest rate jumped from 0.96% to 1.9% and kept increasing every day. I guess some lousy hedge funds shorted FCAU and longed F without thinking with their brains, and now they are getting burned. can't be a short squeeze. no news. even names like tesla does not have a squeeze like this with no news. possible reasons: 1. some m&a leaks 2. someone buying and will file a 13D after hour or there's a new 13f showing a big holding. 3. Japanese or Chinese buying:) interesting that today is month end, and the surged happened after europe market is closed. so maybe there's some news in Europe? Link to comment Share on other sites More sharing options...
PLynchJr Posted October 31, 2014 Share Posted October 31, 2014 Only thing I can find is...Fiat Chrysler (FCAU) initiated with an Overweight at Morgan Stanley. Link to comment Share on other sites More sharing options...
muscleman Posted October 31, 2014 Share Posted October 31, 2014 any news causing this spike right now? Could be a short squeeze. All of my FCAU shared were lent out by IB since they listed in NYSE. The interest rate jumped from 0.96% to 1.9% and kept increasing every day. I guess some lousy hedge funds shorted FCAU and longed F without thinking with their brains, and now they are getting burned. can't be a short squeeze. no news. even names like tesla does not have a squeeze like this with no news. possible reasons: 1. some m&a leaks 2. someone buying and will file a 13D after hour or there's a new 13f showing a big holding. 3. Japanese or Chinese buying:) interesting that today is month end, and the surged happened after europe market is closed. so maybe there's some news in Europe? Could also be some rich Middle East dude buying FCAU shares so they can gain control of Ferrari and increase production from 7000 per year to 70000 for their city taxi service. ;D Link to comment Share on other sites More sharing options...
fareastwarriors Posted October 31, 2014 Share Posted October 31, 2014 any news causing this spike right now? Could be a short squeeze. All of my FCAU shared were lent out by IB since they listed in NYSE. The interest rate jumped from 0.96% to 1.9% and kept increasing every day. I guess some lousy hedge funds shorted FCAU and longed F without thinking with their brains, and now they are getting burned. can't be a short squeeze. no news. even names like tesla does not have a squeeze like this with no news. possible reasons: 1. some m&a leaks 2. someone buying and will file a 13D after hour or there's a new 13f showing a big holding. 3. Japanese or Chinese buying:) interesting that today is month end, and the surged happened after europe market is closed. so maybe there's some news in Europe? Could also be some rich Middle East dude buying FCAU shares so they can gain control of Ferrari and increase production from 7000 per year to 70000 for their city taxi service. ;D hahah good one. cheers~! ;D Link to comment Share on other sites More sharing options...
JRH Posted October 31, 2014 Share Posted October 31, 2014 any news causing this spike right now? Someone with a prior position whose books close at the end of the month could be buying into light volume on the new American shares to window-dress their investment returns. The fact that it occurred after Europe closed could be seen as evidence of this. Link to comment Share on other sites More sharing options...
Phaceliacapital Posted October 31, 2014 Share Posted October 31, 2014 Only thing I can find is...Fiat Chrysler (FCAU) initiated with an Overweight at Morgan Stanley. That was already known at the European opening, I am guessing they are underwriters of the convertible. Link to comment Share on other sites More sharing options...
sleepydragon Posted October 31, 2014 Share Posted October 31, 2014 Only thing I can find is...Fiat Chrysler (FCAU) initiated with an Overweight at Morgan Stanley. Goldman has no rating with fiat yet. they had one last year, but removed it because supposedly they are working for the firm on who knows what. now they still have no rating. I couldn't find out what their rating was before they removed yet. Link to comment Share on other sites More sharing options...
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