Fiat to buy US gov't share of Chrysler

Fiat and the United States Department of Treasury (UST) have today agreed that Fiat will pay US$500M to purchase the six per cent share it holds in Chrysler.

The news comes after Fiat's May 27 notice of exercise for the UST Call Option, the UST agreeing to assign all of its rights under the Equity Recapture Agreement entered between itself and the VEBA (Voluntary Employee's Beneficiary Association) back in June of last year, for a price of US$75M.

Last week, Chrysler fully repaid the US$7.6B in loans it owed to the US and Canadian governments from the 2009 bailout. That step allowed joint-owner Fiat to pay US$1.27B in cash for a further 16 percent share in Chrysler, boosting the Italian firm's stake.

Under the rules of the latest agreement, and in accordance with US law, Fiat must:

Fiat's chairman John Elkann thanked the group's CEO and the US government for their cooperation following Chrysler's near bankruptcy and consequential establishment of its joint venture with Fiat, pledging the firm's ongoing support.

"On behalf of my family and myself, I reiterate our confidence in Sergio Marchionne and his leadership team and our support of all the people at Fiat and Chrysler who are working with dedication and humility and have made it possible to repay the trust that the US government demonstrated towards us a mere 23 months ago," said Elkann.

"We will continue to support them as they further strengthen this historic alliance and together build an international automotive group capable of competing with the very best in the automotive market."

Sergio Marchionne, CEO of both Fiat and Chrysler reiterated his gratitude for the Obama administration's confidence in the Italian manufacturer, saying the future of both brands will be strengthened as a result of the $500M agreement.

"The agreement reached today marking the complete exit of the United States Treasury as a Chrysler Group shareholder does not lessen the sense of gratitude that we feel toward President Obama's administration for believing two years ago in Chrysler's partnership with Fiat," explained Marchionne.

"The acquisition of the UST's rights under the Equity Recapture Agreement is a further demonstration of the trust we have in the future of Chrysler and its ability to continue on a path to take its rightful place in the global automotive industry landscape.

"Today's announcement not only allows Fiat to strengthen its stake in Chrysler Group but it also accelerates our integration agenda designed to create a global, efficient and competitive automaker, and guaranteeing to our extended Chrysler family a sound future built on an open and multi-cultural environment on shared values of integrity and respect for others."

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