April 20, 2024

U.S. to Sell Its Chrysler Stake to Fiat

President Obama plans to announce the deal during a visit to a Chrysler plant in Toledo, Ohio, on Friday.

“As Treasury exits its investment in Chrysler, it’s clear that President Obama’s decision to stand behind and restructure this company was the right one,” the Treasury secretary, Timothy F. Geithner, said in a statement. “Today, America’s automakers are mounting one of the most improbable turnarounds in recent history — creating new jobs and making new investments in communities across our country.”

The deal on Thursday and Fiat’s purchase last week of 16 percent of Chrysler for $1.3 billion, value Chrysler at a little more than $8 billion. The Treasury owns 6 percent of Chrysler, on a fully diluted basis.

Chrysler last week also repaid the $7.5 billion it owed to the United States and Canada.

The sale of Treasury’s stake is subject to regulatory approval and expected to close in one to three months, said two people with direct knowledge of the transaction’s details but who were not authorized to speak publicly about the matter. It will give Fiat majority ownership of Chrysler, which emerged from bankruptcy protection a little more than two years ago.

In addition to buying Treasury’s shares, Fiat also agreed to buy options held by the American and Canadian governments to purchase Chrysler shares held by a United Automobile Workers union trust fund for $5 billion. Treasury will receive $60 million for the options, and $15 million will go to Canada.

The governments were not interested in buying more shares of Chrysler, according to the people who spoke on condition of anonymity. Fiat would then be able to acquire the vast majority of Chrysler outside of an initial public offering.

After the deal closes, Chrysler will have repaid $11.2 billion of the $12.5 billion it received from Treasury in 2008 and 2009 to prevent its collapse.

A report by the White House National Economic Council this week projected that the government will fail to recoup about $14 billion of the $80 billion it put into rescuing the auto industry.

Article source: http://feeds.nytimes.com/click.phdo?i=d1b32f54de400067949ed79a304f88ad

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