Fiat steers Chrysler free of US, Canadian bailouts

Fiat paid $500 million for the US Treasury's remaining six per cent stake in Chrysler and $60 million for rights, in the consummation of a deal first announced in early June.

Fiat meanwhile paid $140 million (CAN$132.3 million) for the Canadian government's small remaining interests in the number-three US automaker, according to Canada's finance ministry.

In the wake of the share sales, Fiat now owns 53.5 per cent of Chrysler.

The US Treasury, which put more than $12 billion into a rescue of Chrysler at the height of the US economic crisis, said it was likely to lose $1.3 billion for its efforts.

"Treasury has fully exited its investment in Chrysler Group under the Troubled Asset Relief Program (TARP)," it said in a statement.

The Treasury said it had received more than $11.2 billion in payments of principal, interest and fees from Chrysler, all related to loans from the TARP, which was originally designed to rescue troubled financial institutions.

Chrysler and General Motors, the biggest US automaker, required government rescues and underwent bankruptcy reorganizations to survive a severe slump in US auto sales during the 2008-2009 financial crisis.

Both firms emerged from bankruptcy in June 2009. Fiat has been steering Chrysler since then, incrementally increasing its holding.

The repayment came at least six years earlier than expected, Tim Massad, assistant Treasury secretary for financial stability, said in the statement.

"This is a major accomplishment and further evidence of the success of the administration's actions to assist the US auto industry, which helped save a million jobs during the worst economic crisis since the Great Depression."

US taxpayers will still be on the hook for some of what was loaned to Chrysler before it underwent bankruptcy reorganization.

"Treasury is unlikely to fully recover the difference of $1.3 billion owed by Old Chrysler," the department said.

Canada will receive $125 million for its interests in Chrysler, and an additional $15 million as a portion of proceeds from a US agreement with the UAW union, the Canadian finance ministry said.

One-third of the $140 million in proceeds will be transferred to the government of Ontario "in recognition of the support" provided by the province, home to the country's auto industry, the ministry said.

The government estimated the bailout saved about 52,000 jobs in Canada.