Last week, Fiat said that it would buy the United States government’s remaining holding in Chrysler. When completed, the transaction will give Fiat majority ownership of Chrysler, which emerged from bankruptcy about two years ago after receiving emergency financial assistance from the governments of the United States and Canada.
But after a meeting with Sergio Marchionne, the chief executive of both Chrysler and Fiat, Jim Flaherty, the finance minister, said that Canada would let the divestment process in the United States unfold before making any decision about its holdings.
“We’ve never believed the government of Canada should be in the automotive business,” Mr. Flaherty said at a news conference in Toronto. “But we have to look out for good value for Canadian taxpayers.”
After providing about 2.9 billion Canadian dollars in emergency loans, the government of Canada and the province of Ontario still hold a combined total of about 1.7 percent of Chrysler’s shares. Unlike the arrangement in the United States, neither Chrysler nor Fiat has any way to force the Canadian governments to divest.
The American process, which involves 6 percent of Chrysler’s shares, will establish a value for the company’s stock. If it is not to Mr. Flaherty’s liking, Canada can wait until Fiat has an initial public offering for Chrysler, or even later, to sell.
Mr. Flaherty, who met with Mr. Marchionne in Toronto to publicly signal Chrysler’s repayment of the 1.7 billion Canadian dollars in loans made through a federal export financing agency, did not indicate what price Canada might accept. Given that the government does not anticipate that Chrysler will pay back the remaining 1.2 billion Canadian dollars, it presumably hopes to recover at least some of that through the share sale.
“We will look at whatever is proposed and consider that,” Mr. Flaherty said.
It is unclear what the province of Ontario, which covered about one-third of the Canadian loans, plans to do with its shares.
Darcy McNeill, a spokesman for Dwight Duncan, the provincial minister of finance, said that it was “not appropriate” for the provincial government to comment at this time.
Article source: http://www.nytimes.com/2011/05/31/business/31auto.html