New Issue: Fiat $2.2 billion exchangeables into GM at 3.25% yield, up 38.14%

By Ronda Fears

Nashville, Tenn., Dec. 11 - Fiat Finance Luxembourg SA sold $2.2 billion in proceeds of five-year exchangeables which convert into General Motors Corp. stock at par to yield 3.25% with a 38.14% initial conversion premium. Merrill Lynch & Co. and Salomon Smith Barney were joint book-running lead managers of the Rule 144A deal, which sold in the mid-range of pricing guidance that put the yield between 2.75% to 3.5%.

The Italy-based carmaker said it plans to use proceeds to reduce its existing credit facilities and repay other debt. The issue is guaranteed by Fiat SpA.

Terms of the new deal are:

Issuer: Fiat Finance Luxembourg SA

Amount: $2.2 billion

Lead Managers: Merrill Lynch and Salomon Smith Barney

Maturity Date: Jan. 9, 2007

Coupon: 3.25%

Issue Price: par

Yield: 3.25%

Conversion Premium: 38.14%

Exchange Price: $69.54

Exchange Ratio: 14.3802

Call: non-callable

Put: in year 2.5 at par, in cash, plus accrued and unpaid interest

Contingent Conversion: no

Contingent Payment: no

Rating(s): Moody's: Baa2

Settlement Date: Jan. 9

End

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