The amended pact between SCUSA and FCA adapts specific performance ratios, exclusivity obligations and payment rules under the agreement, as evidenced by the submission of an 8-K contract to the Securities and Exchange Commission. Santander`s contract with the FCA, which is now under contract for the seventh year, has been signed for a period of ten years. DALLAS, July 1, 2019 /PRNewswire/ — Santander Consumer USA Holdings Inc. (NYSE: SC) (“SC” or “the company”), which operates as Chrysler Capital, announced today that it has entered into an agreement with FCA US LLC (“FCA”) to amend the Master Private Label Financing Agreement (the “Chrysler Agreement”). Under the Chrysler agreement, valid for the seventh year of a 10-year term, SC is the preferred provider of consumer credit, leases and dealer loans to FCA. The change “calls into question the fact that the two companies are looking forward to a successful relationship for the remaining years of the agreement,” SCUSA spokeswoman Laurie Kight told Auto Finance News. “The $60 million was paid to the CFA on June 28 in additional commercial consideration,” she said. The toll period began in July 2018, a month after FCA proposed the idea of creating its own prisoner, according to documents submitted to the U.S. Securities and Exchange Commission. As part of a toll agreement, companies set the statute of limitations when negotiating certain conditions over a period of time. Laurie Kight, senior vice president of communications at Santander Consumer USA, said the toll agreement “prevented the parties from communicating under the existing contract, while we have had ongoing discussions to find a mutually beneficial way forward.” The updated contract recalibrates performance targets and cancels a toll agreement, as Santander has indicated. The toll agreement put the contract on hold, meaning the two companies acted under the agreement as part of the agreement in force on April 30, 2018. CONTACTS: Investor RelationsEvan Black800.493.8219InvestorRelations@santanderconsumerusa.com view original content:www.prnewswire.com/news-releases/santander-consumer-amends-agreement-with-fca-us-30087834.html Media Relations Laurie Kight214.801.6455Media@santanderconsumerusa.com However, the agreement does not exclude FCA from relocating its own infinance company at any time.
Santander Consumer USA and Fiat Chrysler Automobiles have updated their private label financing agreement, Santander said on Monday. The lender will make a one-time payment of $60 million to FCA under the revised agreement. “We are pleased to have entered into a mutually beneficial agreement that will strengthen our partnership with FCA in the future,” said Scott Powell, Chief Executive Officer of SC. “This change creates an operational framework for the remainder of our contract and positions us to continue to make FCA successful.” The status of the 2013 financing agreement was called into question in June 2018, when then-CEO Sergio Marchionne told investors that FCA would begin its own captivity, either through acquisition or the creation of a financial company. In 2013, FCA and Santander signed a 10-year financing agreement under which the Chrysler Capital brand was created. At the time, Santander was paying a fee of $150 million. Since signing the Chrysler contract in 2013, Santander, which is in the position of Chrysler Capital, has received more than $55.5 billion in auto loans and $35.3 billion in leases, according to an SEC submission. The adjusted performance targets that are part of the revised agreement have not been made available to the public. As the mid-term of the 10-year contract approached last year, FCA began buying Santander`s Chrysler portfolio to create its own captivity.
After nearly a year of consultation, FCA indicated in a first-quarter earnings call that it was no longer in captivity in the United States. Instead, it focuses on the current contract with SCUSA. As part of the change, SC will provide a one-time payment of $60 million to FCA.