Fiat is reportedly close to buying the government's remaining stake in Chrysler.
NEW YORK (CNNMoney) -- Fiat might soon buy the remaining shares of Chrysler Group stock now held by the U.S. and Canadian governments, closing the book on the 2009 bailout with Treasury still likely to be short by more than $1 billion.
Trade publication Automotive News Europe reported Wednesday that Fiat plans to exercise its option to buy the U.S. Treasury's 6.6% stake in Chrysler, along with Canada's 1.7% stake, by the end of July. The report cited a person with direct knowledge of the matter.
Fiat has the option to buy the government-held shares any time in the 12 months after repayment of $7.6 billion in government loans, which Chrysler paid off Tuesday. If the shares are purchased before an initial public offering, the price is set by either agreement between the two sides or by estimates of investment banks.
An IPO is not likely for Chrysler until later this year or early next year.
Chrysler spokesman Gualberto Ranieri referred all questions to Fiat, while Fiat spokesman Richard Gadeselli said he wouldn't comment on speculation.
But Sergio Marchionne, the CEO of both Fiat and Chrysler, told reporters in Turin, Italy, on Wednesday that while Fiat had yet to decide on the timing of the purchase, "the more we wait, the more we would pay for it."
Fiat purchased an additional 16% of Chrysler's shares Tuesday at the same time the company repaid the loans, paying $1.3 billion and bringing its stake up to 46%. Based on that price, which was set as a multiple of recent Chrysler earnings, Fiat would likely pay slightly more than $500 million for Treasury's remaining stake in the company.
But the loan repayment still left taxpayers about $1.9 billion short of the money given to Chrysler.
Treasury did not have any immediate comment on the reports of Fiat's move to buy its shares. But it is on record saying it would like to dispose of its holdings as soon as practical, and that it recognizes that it is unlikely to fully recover its remaining outstanding investment in the automaker.
About 46% of Chrysler is now owned by union-controlled trust funds, which will be used to pay future retiree health care expenses. The funds are likely to sell those many of those shares during the IPO, and Fiat has an option to buy those shares starting in July 2012.
General Motors (GM, Fortune 500) has also repaid loans it received from Treasury during its bailout, and the government sold some of its shares in the company last November during the company's IPO.
Treasury still owns about one third of GM's shares, worth about about $16 billion at current market prices. That would also be short of the $23.4 billion of remaining bailout money given to the company. 
