Fiat has options to raise its stake in Chrysler Group to over 70 percent

Article by Christian Andrei, on May 7, 2011

As the U.S. government aims to exit its investments in the auto industry, Fiat S.p.A. has options to raise its stake in Chrysler Group LLC to over 70%.

In a filing with the U.S. Securities and Exchange Commission, Chrysler said that after debts are repaid to the government, Fiat will have an option for 12 months to buy the U.S. Treasury's remaining stake.

Last April, Chrysler said that it will issue new debt to repay the government loans, permitting Fiat to exercise an option to raise its stake from 30% to 46%.

On April 12, the company revealed that the Treasury holds an 8.6% stake in Chrysler. This amount will be reduced when Chrysler is able to meet the last of three performance milestones that each gives Fiat an additional 5% stake.

Sergio Marchionne, the CEO of both Fiat and Chrysler, said that the final goal -- to build a vehicle that gets 40 mpg in the U.S. – will be accomplished this year.

Chrysler said that Fiat also holds an option to acquire 40% of the original stake held by the UAW's retiree health-care trust. The filing revealed that this option is exercisable from July 1, 2012, to Dec. 31, 2016, and in amounts of up to 8% in any six-month period.

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