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Fiat, has offered Canadian government $125 million for its 1.7 percent stake in Chrysler. Last week, Fiat made a $500 million offer to the U.S Treasury to buy out the remaining 6 percent stake held in Chrysler, according to Reuters.
With the involvement of the U.S Treasury, Fiat hopes to increase its ownership of Chrysler from its current 52 percent stake in the company to 53.7 percent.
Fiat and Chrysler CEO, Sergio Marchionne, has also approached VEBA, an affiliate of the United Auto Workers Union to strike a deal to buy out their share. VEBA was given a 45.7 percent stake in the automaker during the bankruptcy restructuring. Marchionne explained that if a deal was secured to buy out the VEBA share, Chrysler may not even hold an initial public offering as it would not be necessary.
“We purchased that right (to buy out VEBA) to make sure no one else would sit at the table,” said Marchionne. “All options are open. The objective is to monetize VEBA’s position, so we need to find a way to give them the money.”
So far, Fiat has already secured an option to buy out 40 percent of VEBA’s holdings in Chrysler.
It’s well known that Chrysler and General Motors asked for Government loans to help them restructure during the most recent recession. It’s also well documented that Ford Motor Company asked for access to an emergency line of credit.
But what is less well known is that other automakers, including BMW and Mitsubishi also tapped the U.S. Federal Reserve for billions of dollars during the debt crisis. In BMW’s case, the Munich based company secured $3.62 billion in a line of credit, during a single transaction.
This helped it weather the economic storm better than others, while at the same time allowing it to invest in manufacturing and R&D, some of the funds being used for an expansion of it’s Spartanburg, South Carolina assembly plant that builds the X3 and X5. Yet, despite posting it’s lowest operating profit in 10 years during 2009, the company was still able to generate $2 billion in the black.