Fiat could own 70 percent of Chrysler within the year

By Dee-Ann Durbin AP Auto Writer DETROIT (AP) -- Italian automaker Fiat SpA could own more than 70 percent of Chrysler Group within a year once it repays its government loans and exercises other options, Chrysler said Monday in a filing with the U.S. Securities and Exchange Commission. Fiat may acquire the U.S. Treasury's 8.6-percent stake in Chrysler. That would potentially let the government exit the investment more quickly than if it waited for Chrysler to hold an initial public offering. In the case of General Motors Co., the government waited until last November's public offering to sell off some of its stake, but it still owns a portion and must now decide when to sell it. While the terms aren't new, this was the first time Chrysler had spelled them out since the U.S. government gave Fiat a 20-percent stake and management control of Chrysler in 2009, after the U.S. automaker emerged from bankruptcy protection. The U.S. government also gave Chrysler $10.5 billion in government loans. Fiat's stake in Chrysler now stands at 46 percent, after Fiat announced last month that it would pay $1.3 billion for a 16-percent share. Fiat expects to have a 51-percent stake in Chrysler by the end of this year after meeting certain government-set goals, including introducing a 40-mile-per-gallon car. A majority share will allow Fiat to control Chrysler's board and have more say in when to hold a public offering, Chrysler said in its filing. Chrysler said Fiat also may acquire the U.S. government's 8.6-percent stake in a 12-month period following the repayment of government loans. Chrysler is expected to repay $7.5 billion in U.S. and Canadian government loans in the second quarter using money from a debt offering and new bank loans. Fiat also may acquire additional stakes now held in a United Auto Workers-run trust for retiree health care. Fiat chief Sergio Marchionne, who also runs Chrysler, said last month that Chrysler appreciated the bailout but wants to end its relationship with the government as quickly as possible. One reason is the punishing interest rate on the government loans, which cost Chrysler $1.2 billion last year. "It's time to close the loop on what has been an incredibly necessary intervention," Marchionne said at a Jeep plant near Detroit, which he toured with U.S. Treasury Secretary Timothy Geithner. Geithner said the government also wants to get out of the auto business. "We'll do this as quickly as we can, understanding we want to balance that with the ability to get the highest return," he said. Published: Wed, May 11, 2011