In a milestone move, the U.S. government unveiled plans late Thursday to unload its remaining 6% stake in bailed-out auto maker Chrysler to Fiat, the companys Italian parent.
In return for the stake of 98,461 shares in the Detroit auto company, the Treasury Department said it will receive $500 million and a $60 million option for the United Auto Workers retiree trust stake in Chrysler.
However, the U.S. warned it is unlikely to fully recover $1.3 billion of the $12.5 billion it committed to Chrysler, marking a significant loss in the controversial rescue of the auto makers that began under former President George W. Bush and was completed by the Obama Administration.
Today, America's automakers are mounting one of the most improbable turnarounds in recent history - creating new jobs and making new investments in communities across our country, Tim Geithner, the secretary of the Treasury Department, said in a statement.
Chrysler previously repaid $5.1 billion in TARP loans on May 24 and terminated its ability to draw a remaining $2.1 billion in rescue money.
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 U.S. government demonstrated towards us a mere 23 months ago, Fiat Chairman John Elkann said in a statement.
All told, the U.S. provided $12.5 billion of TARP funds to Chrysler through the contentious Automotive Industry Financing Program.
Chrysler does appear to have turned a corner, earlier this month posting a 36% jump in revenue and a profit of $116 million its first since emerging from bankruptcy two years earlier.
While the rescues of Chrysler and General Motors (GM) prevented a deeper economic downturn and saved at least a million jobs by some estimates, they have been criticized for creating moral hazard issues and intruding on free-market ideals.
Lazard (LAZ) acted as the Treasury Departments exclusive financial adviser on the Chrysler transaction.
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