US to sell remaining Chrysler stake to Fiat

Jun 3, 2011, 2:25 GMT

Washington - The US government is selling its remaining 6-per-cent equity in carmaker Chrysler to Italy's Fiat SpA for 500 million dollars, the US Treasury Department announced late Thursday.

'After the completion of this transaction, Treasury will have fully exited its TARP investment in Chrysler Group LLC,' the department said in a statement.

TARP refers to the Troubled Asset Relief Programme launched by the US government to rescue firms on the edge of failing during the 2007-2009 recession.

The government still owned a 6-per-cent stake in Chrysler after the company last week repaid the remaining 7.6 billion dollars owed to the US and Canadian governments under the 2009 rescue package.

The deal announced Thursday also involves a payment by Fiat of 75 million dollars for proceeds from union holdings, which will be split 60 million dollars to the US and 15 million dollars to Canada.

Chrysler Group earlier this month reported its first [positive results in two years, with a net profit of 116 million dollars for the first quarter. A rise in sales of its Dodge and Jeep vehicles helped boost its earnings.

In the rescue package, Chrysler was forced into bankruptcy and came out of the process under majority ownership by Fiat.

Fit chief Sergio Marchionne, who took over Chrysler operations, said last week that the government support had given the company 'a rare second chance to demonstrate what the people of this company can deliver.'

'We owe a debt of gratitude to those whose intervention allowed Chrysler Group to re-establish itself as a strong and viable carmaker,' he said.

Fiat aims to acquire 51-per-cent ownership and return the company to public trading.

President Barack Obama's move to bail out Chrysler brought political condemnation from opposition Republicans during his first months in office.

Treasury Secretary Tim Geithner did not miss the chance to make some political capital over the final exit from Chrysler, saying it showed that Obama's 'decision to stand behind and restructure this company was the right one.'

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