DETROIT (Reuters) - Fiat Chrysler Automobiles (FCHA.MI) (FCAU.N) announced on Tuesday that it has eliminated covenants linked to term loans of its U.S. unit, FCA US LLC, thus gaining full access to the subsidiary's cash.
After completing a buyout of its U.S. unit in early 2014 and creating Fiat Chrysler Automobiles, the heavily indebted carmaker has been seeking to restructure Chrysler's finances to be able to fully access the division's cash, that until now was limited by a cap on dividends and debt covenants.
Fiat Chrysler Automobiles on Tuesday said its FCA US LLC entered into amendments to its term loans maturing in 2017 and in 2018.
"The amendments represent the final step toward allowing the free flow of capital among members of the FCA Group, as previously announced, and enabling access to the second 2.5 billion euros ($2.8 billion) tranche of Fiat Chrysler Automobiles' 5 billion euros syndicated revolving credit facility," the company said in a press release.
It also said that FCA US LLC made a $2 billion prepayment applied to the term loans, leaving an aggregate principal balance of the term loans of about $2.8 billion.
Fiat Chrysler can now use the cash to help fund a product overhaul of key brands Jeep, Alfa Romeo and Maserati by 2018, at which time the company also says it will have eliminated its net debt.
Reporting by Bernie Woodall; Editing by Diane Craft