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The Chrysler Group has repaid it outstanding debt worth $7.6 billion in loans to the U.S and Canadian governments. This ends nearly two years of public ownership of the third largest U.S automaker.
Chrysler made a payment of $5.9 billion to the U.S Treasury and $1.7 billion to Export Development Canada- finally ending loans that bailed Chrysler out of near bankruptcy in June 2009. It is impressive that the automaker managed to repay all debts six years ahead of schedule.
“Less than two years ago, we made a commitment to repay the U.S. and Canadian taxpayers in full and today we made good on that promise,” CEO Sergio Marchionne said in a statement. “The loans gave us a rare second chance to demonstrate what the people of this company can deliver and we owe a debt of gratitude to those whose intervention allowed Chrysler to re-establish itself as a strong and viable carmaker.”
The repayment became possible for Chrysler through its 16 new or refreshed models this year. The company reported a first quarter net profit for the first time since exiting bankruptcy under the control of Italy’s Fiat S.p.A
The automaker initially borrowed $5.1 billion from the U.S and $1.6 billion from Canada in June 2009 however the company racked up $1.8 billion in interest.
[Source: Automotive News]
The Chrysler Group LLC is expected to announce today that it has reached a deal to refinance its debt.
The Auburn Hills based company plans to repay $7.5 billion in government loans to both the U.S and Canadian governments by May 24th. Chrysler owes $5.9 billion to the U.S and $1.6 billion to Canada. Chrysler’s partner Fiat SpA is to increase its share in the struggling automaker to 46 percent, reducing both the American and Canadian government’s share of Chrysler.
Fiat will pay Chrysler $1.3 billion in cash to repay the loans and increase its share by additional 16 percent. Chrysler will use $3.5 billion in bonds, a $2.5 billion term loan as well as Fiat paying the $1.3 billion in cash. The loan payoff comes far ahead of what was required. Chrysler had until 2017 to repay its debts in full. With this financial move, Chrysler hopes to offer public stock likely later this year or the next based on market conditions and the wishes of its shareholders.
With Fiat’s help, Chrysler has revamped its product lineup, redesigned its vehicles fetching higher prices and in the first quarter has reported its first net profit of $116 million. Chrysler and Fiat CEO Sergio Marchionne said Chrysler is on track for a net revenue of $55 billion in 2011, a $2 billion operating profit and net profit of $200 to $500 million.
[Source: Detroit News]