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Tue May 31, 2011
Fiat plans to buy Canada's stake in Chrysler
The majority owner of Chrysler, Fiat, is anxious to rid the company of any government ties.
Last week, the company refinanced it's TARP loans from the U.S. government.
Then they announced plans to buy the U.S. government's remaining 6% stake.
And now, Sergio Marchionne (CEO of Fiat and Chrysler), says the company plans to purchase the Canadian government's small stake in Chrysler.
From the Associated Press:
The chief executive officer of Chrysler and Fiat said Monday he and Canadian authorities have begun talking about purchasing Canada's 1.7 percent ownership in Chrysler.
Unlike with the shares owed by the U.S. government, the company has no right to compel the Canadian government to sell.
Michigan Radio's Tracy Samilton pointed out that Chrysler will be out from under government influence before General Motors:
GM is currently chafing under TARP rules that impose a cap on executive compensation so long as the Treasury is part owner of the company.
Chrysler will no longer be subject to those rules once the U.S. Treasury sells its Chrysler holdings.
Canada's Finance Minister said officials "will wait to see how the stock transfer process unfolds in the United States before deciding whether Canada will also sell its shares."
A restructuring expert told Tracy Samilton that Fiat is likely working to clean up ownership stakes in Chrysler in advance of taking the company public in an IPO. Sheldon Stone of Amherst Partners said having no government involvement in an IPO will help, "Fiat will have a total say over the process of getting the IPO ready and what the IPO looks like," said Stone.
U.S. Treasury to sell Chrysler stock