Late last night, Fiat SpA reportedly came to an agreement with United State Department of Treasury to purchase the final 6.6% of the Chrysler Group held by the US government along with the feds remaining options in Chrysler for a total price of $560 million.
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Fiat will pay $500 million for the final 6.6% of Chrysler held by the US Dept of Treasury along with an additional $60 million for the government’s options to buy additional Chrysler shares. President Barrack Obama is at Chrysler’s Toledo production facility today to applaud the company for their quick repayment of the bailout loans of 2008 and it is expected that he will officially announce the last of the government’s stake in Chrysler being sold to Fiat SpA.
The options that Fiat purchased for the $60 million on top of the $500 million that was paid for the fed’s 6.6% stake in Chrysler pertains to the government’s option to purchase up to 45% of the stake held by the Union Auto Workers retiree fund. With Fiat purchasing those options, the Italian automaker could raise their stake in Chrysler up to 76% by exercising similar options to buy shares from the UAW. These UAW-US government options had a fairly low value as they are not transferable in the event of an Initial Public Offering but by securing the final 6.6% and the options pertaining to the UAW retiree fund, Fiat has effectively removed the US government from the Chrysler equation.
The final piece of the puzzle in Fiat’s efforts to remove Chrysler from all government control lies in the 1.7% current held by the Canadian government. The Canadian department in control of these types of affairs announced that they are interested in selling the last of their stake in Chrysler but only if the price is right. Canadian federal and provincial governments both have been waiting to see how much Fiat paid for the last of the US government’s stake in Chrysler and if the neighbors to the north like that price, they could sell their final hand in Chrysler to the Fiat group.
Source: The Detroit News
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