A US tax issue reportedly is behind Chrysler delaying its IPO until the first quarter of 2014.
One of “two sources familiar with the process” told Reuters an IPO was not likely until 2014, adding that underwriters were notified of the decision late last week.
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Fiat had said on Monday (25 November) that it would “not be practicable” to complete a Chrysler IPO this year after initially planning to start the process early in December.
The timeline hit a snag due to complications involving the conversion of Chrysler from a limited liability company (LLC) to a C corporation, the Reuters sources said.
Most public companies are C corporations and the conversion to this structure would likely mean additional taxes for Chrysler, Peter Bible, chief risk officer of accounting firm EisnerAmper, said.
As a limited liability corporation, Chrysler has few shareholders and passes losses and the responsibility of paying taxes to its owner. But a C corporation pays its own taxes, can have an unlimited number of shareholders and also bears a greater tax burden.
The news agency noted that chief executive Sergio Marchionne wants to formally merge Fiat and Chrysler to create the world’s seventh largest automaking group, and has repeatedly said he would prefer to avoid an IPO for the time being.
Chrysler was forced to file IPO paperwork in late September after it failed to reach a buyout deal with its minority shareholder, a retiree healthcare trust tied to the United Auto Workers union.
