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post #1 of 2 (permalink) Old 06-03-2011, 07:02 AM Thread Starter
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Fiat Agrees To Buy U.S. Treasury's 6% Stake In Chrysler For $560 Mln
6/3/2011


The U.S. Department of the Treasury has Thursday reached an agreement with Italian carmaker Fiat S.p.A to sell its 6 percent fully diluted equity interest in automaker Chrysler Group LLC. To Fiat. The expected total proceeds to Treasury from this transaction are $560 million.

"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. 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," Treasury Secretary Tim Geithner said in a statement.

Fiat announced on Friday that it would exercise an option to buy the U.S. Department of Treasury's 6 percent stake in Chrysler Group LLC over the next 10 days.

According to the agreement reached, Fiat agreed to pay Treasury $500 million for Treasury's 98,461 shares of Chrysler. It will also receive another $60 million as 80 percent of the $75 million of proceeds from the purchase of shares by Fiat that were retained by the UAW retiree trust. The Government of Canada will receive 20 percent of the proceeds of $15 million.

Following the completion of this transaction, the Treasury will have fully exited its TARP investment in Chrysler Group LLC, which has returned more than $11.2 billion of a total of $12.5 billion that the Treasury committed to Chrysler under TARP's Automotive Industry Financing Program (AIFP).

Following the consummation of the purchase of the interest held by Treasury and the occurrence of the final Performance Event expected later this year Fiat will hold 57% of the outstanding equity in Chrysler.

Chrysler, which was once part of German automotive company Daimler AG, emerged from Chapter 11 bankruptcy protection in June 2009 and was bought by Fiat in a U.S. government-brokered deal.

Fiat had then formed a global strategic alliance with Chrysler with an initial 20 percent interest in it, which was to be raised to 51 percent on achievements of performance-related milestones by Chrysler.


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post #2 of 2 (permalink) Old 06-03-2011, 09:20 AM
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Personally, I think that the whole 12.5 billion should be returned, although GM will never repay all of what it borrowed, and the difference will be sizable when compared to Chrysler's 1.3 billion deficit. I will NEVER drive a GM car again.




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