Chrysler Group LLC, the U.S. automaker operated by Fiat SpA, is planning to borrow about $6 billion to pay off government debt as Fiat moves to increase its ownership, people familiar with the plan said.

Details are still being completed on the debt and may be announced as soon as next week, said the people, who asked not to be identified revealing private plans. Chrysler has said its effective interest on the borrowings from the U.S. is as high as 14 percent and as much as 20 percent on the Canadian debt, reported Bloomberg.

Reducing the interest expense should improve profits. Sergio Marchionne, chief executive officer of both automakers, is slated to release Chrysler’s first-quarter results on May 2. He is pushing Chrysler to earn as much as $500 million this year, its first annual profit since emerging from bankruptcy reorganization in 2009.

Eileen Wunderlich, a spokeswoman for the Auburn Hills, Michigan-based automaker, declined to comment on refinancing plans.

The refinancing plan includes $1.27 billion from Fiat as part of its plan to execute an option to increase its ownership stake to 46 percent from 30 percent after the governments are repaid, said the people familiar with the plan.

The face values of the debts to the U.S. and Canadian governments are $7.53 billion, according to Chrysler’s Feb. 25 Securities and Exchange Commission filing. Those debts must be repaid before Marchionne can exercise his option to purchase the 16 percent stake.

Fiat said last week it aims to exercise that option in the second quarter. The automaker may hold an initial public offering this year or next year, Marchionne has said.

The new debt may be a mixture of loans and bonds, the people said. Marchionne wants it completed by the end of May and Chrysler executives may begin a roadshow soon after the announcement to pitch the debt as an investment, they said.

Chrysler is also expected to get about $2 billion in revolving loans, one of the people said.

Fiat gained control of Chrysler as part of the U.S. automaker’s government-backed restructuring. In exchange for sharing management and technology and for reaching operational milestones, Fiat receives as much as 35 percent of Chrysler. It currently has 30 percent. Marchionne has said he expects to get the final 5 percent by the end of the year.

In conjunction with the purchase option, the Turin, Italy- based automaker would hold a 51 percent stake.

Chrysler’s capital infusion may give the U.S. Department of Energy “additional comfort” about the automaker’s financial structure, Marchionne told analysts last week. He said that he expects that after the Fiat stake increase is completed, Chrysler will be able to make progress and obtain as much as $3.5 billion in low-interest loans.

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