Fiat could own more than 70 percent of Chrysler within a year once it repays its government loans and exercises other options.
Chrysler said in a filing with the US Securities and Exchange Commission on Monday that Fiat might buy the US Treasury's 8.6 percent stake in Chrysler. That would potentially let the government exit the investment more quickly than if it waited for Chrysler to hold an initial public offering.
In the case of General Motors, the US government waited until November 2010's public offering to sell off some of its stake, but it still owns a portion and must now decide when to sell it.
While the terms aren't new, this was the first time Chrysler had spelled them out since the US government gave Fiat a 20 percent stake and management control of Chrysler in 2009, after the US automaker emerged from bankruptcy protection. The US government also gave Chrysler $10.5 billion (R70 billion) in government loans.
Fiat's stake in Chrysler now stands at 46 percent, after Fiat announced in April it would pay $1.3 billion (R8.8 billion) for a 16-percent share. Fiat expects to have a 51 percent stake in Chrysler by the end of 2011 after meeting certain government-set goals, including introducing a six litre/100km car. A majority share will allow Fiat to control Chrysler's board and have more say in when to hold a public offering.
Chrysler said Fiat might also take over the US government's 8.6 percent stake in a 12-month period following the repayment of government loans. Chrysler is expected to repay $7.5 billion (R50 billion) in US and Canadian government loans in the second quarter of 2011 using money from a debt offering and new bank loans.
Fiat may acquire additional stakes now held in a United Auto Workers-run trust for pensioner health care.
Fiat chief Sergio Marchionne, who also runs Chrysler, said in April that Chrysler appreciated the bailout but wanted to end its relationship with the government as quickly as possible. One reason was the punishing interest rate on the government loans, which cost Chrysler $1.2 billion (R8 billion) in 2010.
Marchionne said during a tour of a Jeep plant near Detroit with US treasury secretary Timothy Geithner: “It's time to close the loop on what has been an incredibly necessary intervention.”
Geithner said the government also wanted to get out of the motor industry. “We'll do this as quickly as we can, understanding we want to balance that with the ability to get the highest return,” he said. - Sapa-AP