Treasury Sells Off Chrysler Stake

The Detroit Free Press reports:

The Treasury Department said tonight it has reached a deal to sell to its remaining 6 percent interest in Chrysler to Italian automaker Fiat, along with the government’s rights to purchase the large remaining stake held by a United Auto Workers trust.

Fiat will pay $500 million for the government’s 98, 461 shares of Chrysler, Treasury said, which amounts to $5,078 per share. The deal, which won’t close until it receives normal regulatory approval, will make Fiat the majority shareholder in Chrysler, boosting its stake to 52%.

Fiat will then pay an additional $75 million for Treasury’s option rights to the UAW-held shares. The UAW’s Voluntary Employee Beneficiary Association, known as VEBA, is a trust fund that helps pay health care costs for retired auto workers. It currently owns nearly 46% of Chrysler.

The U.S. government will retain $60 million for transferring the option, and $15 million will go to the Canadian government – pursuant to Canada’s claim on 20 percent of any option sale on the VEBA shares.

As the Free Press previously reported, Fiat notified the U.S. government last Friday, May 27, that it was exercising its call option on Treasury’s Chrysler shares. That triggered a 10-business-day period of negotiation over the price set to end on June 10. If no agreement was reached, up to three investment banks would provide estimates used to determine the sale price.