Chrysler made headlines last month when it announced that it repaid its outstanding $7.6 billion U.S. and Canadian government loans. The $7.6 billion payment included original U.S. and Canadian government loans totaling $6.7 billion, in addition to $1.8 billion of interest and other consideration.
Following the announcement, Chrysler and Fiat CEO Sergio Marchionne said that he plans on buying the U.S. government’s 6 percent stake in the Auburn Hills automaker to increase Fiat’s stake in the American company to 57 percent.
The U.S. Treasury has announced that it has finally reached an agreement to sell to Fiat it’s 6 percent fully diluted equity interest in Chrysler Group LLC and the Treasury’s interest in an agreement with the UAW retiree trust.
“The expected total proceeds to Treasury from this transaction are $560 million,” the U.S. Treasury said in a statement. “Fiat agreed to pay Treasury $500 million for Treasury’s 98,461 shares of Chrysler. Treasury also held the right to proceeds above a certain threshold received by the UAW retiree trust from the trust’s sale of Chrysler equity, as well as a right to purchase all of the shares retained by the UAW retiree trust for a certain threshold amount – which Fiat will purchase for $75 million. Treasury will receive 80 percent of the proceeds ($60 million) from that $75 million, while the Government of Canada will receive 20 percent of the proceeds ($15 million).”
Following the completion of this transaction, the Treasury will have fully exited its TARP investment in Chrysler Group LLC.
“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,” said Treasury Secretary Tim Geithner. “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.”
– By: Omar Rana