The US Department of the Treasury said on Thursday it reached an agreement to sell its remaining 6 percent equity stake in Chrysler to Italy’s Fiat in a deal that will net Washington US$560 million.
The proceeds of the deal include the sale of the US government’s interest in a United Auto Workers (UAW) healthcare trust fund, Treasury said in a mid-evening statement.
US President Barack Obama’s administration invested US$12.5 billion in Chrysler under the Troubled Asset Relief Program in 2009 as part of an auto industry bailout that eventually brought both Chrysler and General Motors Corp through bankruptcy court.
After the transaction with Fiat, Treasury will have received about US$11.2 billion back in principal repayments, interest and canceled commitments from Chrysler.
“Treasury is unlikely to fully recover the difference of US$1.3 billion,” the statement said.
US Treasury Secretary Timothy Geithner said the administration bailout had enabled automakers to mount “one of the most -improbable turnarounds in recent history” that is now creating jobs as domestic automakers gain market share.
Fiat agreed to pay Treasury US$500 million for Treasury’s 98,461 shares of Chrysler. Treasury also had an option to buy shares held by the UAW retiree trust and Fiat agreed to buy that for US$75 million — with Treasury to get US$60 million and the government of Canada US$15 million.
The announcement of the deal with Fiat came on the eve of Obama’s scheduled visit to a Chrysler plant in Toledo, Ohio, where he is expected to tout the success of the auto bailout that saved US jobs and historic auto nameplates like Chrysler.
Treasury said that once the transaction is completed, it will have fully exited its investment in Chrysler. Since the 2007 to 2009 financial crisis ended, Treasury has been making every effort to sell off interests it acquired in industry as part of the rescue effort during those troubled years.
Before Thursday’s announcement, Fiat held a 46 percent interest in Chrysler. That will rise to 52 percent when the transaction is completed and thus give the Italian automaker majority control.
Fiat has made swift work toward that goal in the past six months after meeting certain performance targets and repaying its US$7.6 billion in loans owed to the US and Canada last week.