/Chrysler Repays Government Loans Ahead Of Schedule

Chrysler Repays Government Loans Ahead Of Schedule

A well six years ahead of schedule, Chrysler repays government loans totaling $6.7 billion, in addition to $1.8 billion of interest and other consideration. Looks like Sergio Marchionne knows what he’s doing!

It reminds us of an old article we ran when President Bush confirmed the bailout for Chrysler and General Motors. Turns out they deserved that second chance and got their act together. Both of them are now returned fully to profitability and double-digit worldwide sales. Chrysler must also be thankful to Fiat for this. That said you can’t deny they’ve made some really good cars this past couple of years and that contributed greatly to their success.

Chrysler’s official announcement:

Chrysler Group LLC today announced the repayment of $7.6 billion in outstanding U.S. and Canadian government loans following the completion of new refinancing transactions. The original loans were repaid in full, more than six years ahead of schedule, along with the payment of accrued interest and additional consideration.

Today, the Company made payments of $5.9 billion to the U.S. Treasury (UST) and $1.7 billion to Export Development Canada (EDC) to retire the loans granted when Chrysler Group began operations in June 2009. EDC is the holding company through which the Canadian federal and Ontario provincial governments extended loans to Chrysler Group.

The Company borrowed $5.1 billion from the UST and $1.6 billion from the Canadian governments in June 2009 ($2.6 billion from the original loan facilities was undrawn and the facilities will be canceled). In total, Chrysler Group has paid the UST $6.5 billion and the EDC $2.0 billion, including $1.8 billion in interest and additional consideration.

“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,” said Sergio Marchionne, Chief Executive Officer, Chrysler Group LLC. “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 Group to re-establish itself as a strong and viable carmaker.

“Paying back the loans, along with the financial community’s investment in our refinancing packages, marks another step in the Company returning as a competitive force in the global automotive industry.”

Chrysler Group confirmed the completion of new financing transactions consisting of a term loan totaling $3.0 billion, debt securities totaling $3.2 billion and a revolving credit facility of $1.3 billion. The new financing will save Chrysler Group an estimated $350 million a year in interest expenses.

The Company used the net proceeds from the term loan and bonds, together with $1.3 billion from an equity call option exercised by Fiat for an incremental 16 percent fully diluted ownership interest, to repay the government loans. The revolving credit facility remains undrawn.

Chrysler Group continues to have more than $10 billion in liquidity after the refinancing and loan payoffs, which includes the undrawn revolving credit facility.

“Everyone in the extended Chrysler Group family, from employees to union partners to dealers and suppliers, have worked tirelessly to deliver on our promises and to win back public trust in the Company and our products,” said Marchionne. “There is more work to be done as we remain focused on fulfilling the goals outlined in our 2010-2014 business plan.”

Goldman, Sachs Co. advised Chrysler on structuring the financings and Evercore Partners advised Chrysler Group’s Finance Committee.

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(Founder / Chief Editor / Journalist) – Arman is the original founder of Motorward.com, which he kept until August 2009. Currently Arman is our chief editor and is held responsible for a large part of the news we publish.