Chrysler to fully repay U.S. and Canada loans

Thu Apr 28, 2011 9:37pm EDT
 
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By Deepa Seetharaman

DETROIT (Reuters) - Chrysler Group LLC, which came to the brink of collapse before a federal bailout in 2009, plans to fully repay more than $7 billion in loans from the U.S. and Canadian governments by the end of June.

The company's announcement on Thursday comes almost two years after Chrysler emerged from a U.S.-funded bankruptcy under the management of Italian automaker Fiat SpA.

Thursday's announcement came the same day U.S. Treasury Secretary Timothy Geithner visited Detroit and met with Sergio Marchionne, the chief executive of Fiat and Chrysler.

Proceeds from term loans and debt sold to institutional investors will be used to repay the governments, Chrysler said in a statement. Chrysler aims to repay the governments and pay related fees and expenses in the second quarter.

Fiat will also exercise an option to buy 16 percent of Chrysler for $1.27 billion during the quarter. Chrysler said it will use that cash to repay the loans.

The debt offering, term loans and the cash infusion from Fiat are all expected to occur concurrently, the company said.

Marchionne led Geithner on a tour of a Chrysler plant in Detroit, where he later spoke to reporters and did not say when all work on the refinancing will be completed.

"It ain't over until the fat lady sings. We have a lot of work between now and (when the refinancing) actually gets realized," he said.   Continued...

 
<p>A Chrysler 300 is driven on to the stage during the press day for the North American International Auto show in Detroit, Michigan January 10, 2011. REUTERS/Rebecca Cook</p>