Fiat has announced that it is to exercise the option it
holds to buy the 6 percent stake that the U.S. Treasury
Department holds in the Chrysler Group which will take
the Italian carmaker's equity up above the 50 percent
threshold for the first time. From an initial 20 percent
stake it was given when the Chrysler Group emerged
reborn from the bruising Chapter 11 bankruptcy process
in the middle of 2009, Fiat has steadily raised its
shareholding through an array of different options it
has been able to exercise.
In a statement that was issued in Turin on Friday, Fiat
said that it "has notified
today the United States Department of Treasury (UST)
of Fiat’s intent to exercise its option to purchase the
interest held in Chrysler by UST, equal to 6 percent (on a
fully-diluted basis) of Chrysler’s equity."
In its Friday
statement Fiat also noted the terms it has too meet to
obtain the U.S. Treasury Department's 6 percent stake in
the Chrysler Group: "The price for such purchase will be
based on a determination of the equity value of Chrysler
to be agreed upon between Fiat and UST within ten
business days from the date of submission of the notice
or, absent agreement, established by the average of the
closest estimated values determined by two of three
investment banks appointed by the parties. The completion of such transaction
will be subject to the obtaining of requisite regulatory
approvals."
Fiat last week exercised an
option to buy a further 16 percent stake in Chrysler
Group immediately after the U.S. firm paid back the
outstanding government loans. That hiked Fiat's stake to
46 percent. This further 6 percent equity stake will
then take it up to a controlling 52 percent. Fiat will
also gain a final tranche of 5 percent of the Chrysler
Group's equity before the end of the year; this will be
trigged when the Chrysler Group starts building a car
that achieves 40 mpg. Fiat noted this final event in the
press release, adding: "Following the consummation of the purchase of the
interest held by UST and the occurrence of the final
Performance Event expected later this year Fiat will
hold 57 percent of the outstanding equity in Chrysler."
