Government sells final holdings in Chrysler

July 21st, 2011 Luke Mofflin Leave a comment Go to comments

WASHINGTON — The U.S. government’s sale of its remaining stake in Chrysler Group LLC to Italian automaker Fiat SpA has now formally closed.

The Treasury Department said Thursday that the $560 million deal — which includes $500 million for Treasury’s Chrysler shares and an additional $60 million for the government’s option rights related to the UAW retirement trust’s stake in the company — is now officially completed.

The government’s shares amounted to 6 percent of Chrysler. The closing means Fiat now has achieved its long-awaited goal of becoming the majority owner in the Auburn Hills, Mich., automaker.

According to Treasury, the government committed a total of $12.5 billion to Chrysler as part of the auto rescue, and to date has received back about $11.2 billion of that amount.

Treasury said it was “unlikely to fully recover” the remaining $1.3 billion.

The $12.5 billion total includes money provided by the Bush administration before Chrysler filed for bankruptcy in 2009. The Obama administration provided Chrysler with $8.5 billion.

“With today’s closing, the US government has exited its investment in Chrysler at least six years earlier than expected,” Assistant Secretary for Financial Stability Tim Massad said in a statement. “This is a major accomplishment and further evidence of the success of the Administration’s actions to assist the US auto industry, which helped save a million jobs during the worst economic crisis since the Great Depression.”

Fiat informed the Treasury on May 27 it intended to exercise its option on the government’s Chrysler shares, and the $560 million deal was struck in early June.

Fiat announced separately Thursday that it has also acquired the 1.5 percent stake in Chrysler held by Canada for $125 million.

Fiat now owns 53.5 percent of Chrysler. That percentage could increase to 58.5 percent by the end of the year when Chrysler begins producing a 40 mpg small car in the U.S.

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