Chrysler to Repay Canadian Bailout Loans
Chrysler Group announced Thursday its intentions to repay $7.5 billion in loans from the US and Canada by the second quarter of 2011. This repayment is expected to boost the automaker’s brands and their credibility.
“There’s not a single doubt in my mind that once we repay the U.S. and Canadian governments the perception of our brands will improve,” Marchionne said according to theVancouver Sun. “It will be a great accomplishment if we can get it all done within two years since we came out of bankruptcy."
Chrysler’s move to repay the Canadian, Ontario and US government loans comes from recent proceeds of a new term loan facility and newly issued debt securities that will be offered and sold to institutional investors in a private offering that will be exempt from registration under the US Securities Act of 1933.
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This paired with the recent announcement by Fiat, whose intention is to acquire an incremental ownership interest in Chrysler, will repay its loans from the US and Canadian governments in full with additional intention to pay related fees and expenses.
Fiat’s stake in the automaker will raise its ownership from 30 per cent to 46 per cent with the new refinancing agreement.
Chrysler currently owes $5.3 billion USD to the US government and $2.1 billion USD to the Canadian and Ontario governments. This upcoming Monday, Chrysler will announce its first quarter results.
