VANCOUVER, BC (May 30, 2011) Dominion Lending Centres Clearlease Reports May 30, 2011 Finance Minister Jim Flaherty and the CEO of Chrysler say it’s too soon to decide whether the federal and Ontario governments will sell their shares in the recovering company to Italian carmaker Fiat, although they’ve discussed the idea.
The Canadian governments received the shares — about 1.7 per cent of the Detroit company — two years ago as part of a bailout that also provided $1.7 billion in loans to help Chrysler survive the North American auto sector’s worst downturn ever.
The automaker recently paid back the last of the money it borrowed from the Canadian and American governments, plus interest, and Fiat began the process of buying the shares owned by the U.S. government.
Flaherty joined Sergio Sergio Marchionne, the chief executive of both Fiat and Chrysler, at an auto plant in Toronto on Monday morning but neither man would be definitive about what the Canadian government will do with its Chrysler stock.
Flaherty said Ottawa will wait to see how the stock transfer process unfolds in the United States before deciding whether Canada will also sell its shares.
The federal government has never believed it should be in the automobile business but, on the other hand, it has to ensure that Canadian taxpayers get good value for investing in Chrysler at a time when its survival was in doubt, Flaherty said.
“We will look at whatever is proposed, that comes out of the process that is underway now with the United States Treasury and consider that, bearing those two principles in mind,” Flaherty told a news conference Monday.
“We’re certainly open to it but we have to look at what the proposal is before making a decision, of course.”
Marchionne said Fiat is definitely interested in buying the shares owned by the federal and provincial governments but, unlike with the shares owed by the U.S. government, the company has no right to compel them to sell.
“I have made it clear, and I’ve been public on this, and I did have a brief chat with the minister before this meeting, that we will be quite willing to purchase Canada’s interest in this,” the Fiat CEO said.
“But it is a decision that is, obviously, totally dependent on the discretion of the government of Canada and the province of Ontario.”
The Italian automaker said Friday it will buy the U.S. government’s six per cent stake in Chrysler under a process that was put in place in 2009 when Chrysler virtually shut down while in bankruptcy court.
Fiat initially received a 20 per cent stake in Chrysler in 2009 for providing Chrysler with management expertise and technology.
Since then Fiat has been increasing its holdings in Chrysler and will soon control more than half of the company.
Fiat has helped change the corporate strategy of Chrysler, brought new fuel-efficient vehicles quickly to market and made the company cut costs and operate more efficiently.
The future looks brighter for the company, which employs 9,000 people in Canada and has major assembly plants in Windsor, a southwestern Ontario border city, and Brampton, a community northwest of Toronto.
Flaherty and Marchionne were at the Etobicoke casting plant in west-end Toronto to celebrate Chrysler’s repayment of $1.7 billion borrowed from the Canadian governments by the automaker, plus interest.
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