President Obama was due Friday to
seal the government's sale of its remaining 6 percent equity in
carmaker Chrysler to Italy's Fiat SpA for $500 million.
Obama was to meet Sergio Marchionne, the chief executive of Fiat,
at the company's Toledo Supplier Park, media reported, after the
Italian company said it would seek to gain a controlling stake in the
U.S. company.
"After the completion of this transaction, Treasury will have
fully exited its TARP investment in Chrysler Group LLC," the U.S.
Treasury Department said Thursday in a statement.
TARP refers to the Troubled Asset Relief Program launched by the
U.S. government to rescue firms on the edge of failing during the
2007-2009 recession.
The government still owned 6 percent of Chrysler after the
company last week repaid the remaining $7.6 billion owed
to the U.S. and Canadian governments under the 2009 rescue package.
The deal also involves a payment by Fiat of $75 million for
proceeds from union holdings, which will be split $60 million
to the U.S. and $15 million to Canada.
Fiat has secured the rights to acquire shares held by U.S. motor
industry trade union UAW. The initial plan was to float these shares,
but market observers speculate that Fiat may simply buy them off UAW
-- at an estimated cost of $4 billion.
Chrysler Group earlier this month reported its first positive
results in two years, with a net profit of $116 million 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.
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.
Chrysler is now estimated to be worth at least $8 billion.
Until recently, Marchionne had ruled out a complete takeover but may
be rethinking this decision as the car industry recovers from the
crisis.
Obama's move to bail out Chrysler brought political condemnation
from opposition Republicans during his first months in office.
Treasury Secretary Tim Geithner said it was clear that Obama's
"decision to stand behind and restructure this company was the right
one."
