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Chrysler Group Finalizes $5 Billion Debt Offering and Repays VEBA Trust Note in Full

February 13, 2014

Chrysler Group announced the closing of its previously announced offering of secured senior debt securities, raising approximately $3.0 billion in net proceeds; and senior secured term loan facilities, raising approximately $2.0 billion in net proceeds.

According to a release, Chrysler Group applied the proceeds of the debt offering to prepay all amounts outstanding, including accrued and unpaid interest, of approximately $5.0 billion under the senior unsecured note issued on June 10, 2009 to the VEBA Trust with an original face amount of $4.587 billion.

The secured senior debt securities consist of $1.375 billion aggregate principal amount of 8 percent Secured Senior Notes due 2019 at an issue price of 108.25 percent of their aggregate principal amount plus accrued interest from December 15, 2013, and $1.380 billion aggregate principal amount of 8 percent Secured Senior Notes due 2021 at an issue price of 110.50 percent of their aggregate principal amount plus accrued interest from December 15, 2013. The issue prices represent a yield to maturity of 6.165 percent per annum for the 2019 Notes and 6.433 percent per annum for the 2021 Notes.

The Notes were issued as additional 8 percent Secured Senior Notes due 2019 and additional 8 percent Secured Senior Notes due 2021 under an indenture, dated May 24, 2011, pursuant to which Chrysler Group previously issued $1.5 billion aggregate principal amount of 8 percent Secured Senior Notes due 2019 and $1.7 billion aggregate principal amount of 8 percent Secured Senior Notes due 2021.

In connection with the term loan facilities, Chrysler Group borrowed an additional $250 million of term loans under its existing senior secured credit facilities maturing May 24, 2017, under which Chrysler Group borrows at 2.75 percent over LIBOR, subject to a LIBOR floor of 0.75 percent; and $1.75 billion of term loans under a new senior secured term loan facility maturing December 31, 2018, at 2.50 percent over LIBOR, subject to a LIBOR floor of 0.75 percent.

The refinancing transactions are expected to result in yearly interest expense savings, for the period from 2014 to 2016, of approximately $200 million including the elimination of the non- cash VEBA Trust Note discount amortization of approximately $65 million per annum. Chrysler Group expects to record a non-cash charge of approximately $500 million in connection with the repayment of the VEBA Trust Note. Chrysler Group consolidated financial statements are prepared in accordance with US GAAP.

"This transaction brings to a successful and earlier than anticipated conclusion the process that led the U.S. and Canadian governments, the UAW and the VEBA, together with Fiat, to take on the task of reestablishing Chrysler as a viable automotive enterprise. With the full early repayment of government loans in 2011, the acquisition from the VEBA of their Chrysler equity stake by Fiat in January of this year, and the full monetization of the VEBA note some nine years before the expiry of its term, Fiat and Chrysler together have satisfied all the monetary commitments that were made to Chrysler back in 2009. None remain outstanding. All this is simply a testament to the hard work by the people of Chrysler Group in the last five years and sets the stage for the next chapter as we work to strengthen our global presence as part of Fiat Chrysler Automobiles," said Chrysler Group Chairman and CEO Sergio Marchionne.

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