The US Department of the Treasury has agreed to sell to Fiat its 6% interest in Chrysler Group its interest in an agreement with the UAW retiree trust for an estimated US$560m.
“After the completion of this transaction, Treasury will have fully exited its TARP investment in Chrysler Group LLC,” the organisation said in a statement.
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Fiat will pay the treasury $500m for 98,461 Chrysler shares and $75m for the UAW retiree trust stake with the proceeds split 80% ($60m) for the US government and 20% ($15m) for Canada.
“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.”
The Treasury committed $12.5bn to Chrysler under TARP’s Automotive Industry Financing Program (AIFP). Once the latest deal is done, Chrysler will have returned over $11.2bn of that amount to taxpayers through principal repayments, interest, and cancelled commitments.
“Treasury is unlikely to fully recover the difference of $1.3bn,” the statement added. “Treasury has the right to recover proceeds from the disposition of the liquidation trust associated with the bankruptcy of Old Chrysler, but does not expect a material recovery from those assets.”
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By GlobalDataIn May, Chrysler repaid $5.1bn in Treasury loans six years ahead of schedule. The latest announcement means Fiat will soon hold 52% of Chrysler and shares in the latter rose on Friday, reflecting investor approval.
