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Fiat Moves Closer to Majority Ownership of Chrysler

by Jeff Gilbert
WWJ AutoBeat Reporter

AUBURN HILLS (WWJ) Fiat has increased its ownership of Chrysler to 30 percent, as it closes in on its goal of a 51 percent stake, perhaps as early as this summer.

Fiat was permitted to buy an additional 5 percent of Chrysler, after it met some new benchmarks involving international sales of Chrysler products.

The UAW's VEBA, or retiree trust fund, still owns the majority of Chrysler, at 59.6 percent. The federal government's ownership is 8.6 percent and the Canadian government ownership is 2.2 percent. As Fiat's stake rises, those stakes fall.

The next goal for Fiat is a Chrysler vehicle that gets forty miles per gallon. That will allow Fiat to buy an additional 5 percent stake.

The goal is for Fiat to take a 51 percent ownership in Chrysler. But, that can't happen until Chrysler's 7 billion dollars in government loans are paid off. Chrysler is working to borrow money from investment bankers to restructure those loans. The company is hoping to do that by this summer.

Not only would that allow Fiat to increase its ownership stake in Chrysler, but it would significantly lower interest costs. CEO Sergio Marchionne says, without those high interest costs, Chrysler would have already posted a profit.

The final step would be an Initial Public Offering of Stock. Chrysler had been hoping to do that sometime this year, but Marchionne has said that could be pushed back into next year.

Follow Jeff Gilbert on Twitter @jefferygilbert

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