Chrysler Will Pay Back U.S. Loans Tomorrow
Chrysler Group LLC, the U.S. automaker operated by Fiat SpA, expects to pay off its remaining debt to the U.S. Treasury Department tomorrow, said Sergio Marchionne, chief executive officer of both automakers.
Chrysler raised enough money in a debt offering to pay back the loans, letting Fiat boost its stake in the Auburn Hills, Michigan-based automaker to 46 percent, Marchionne told reporters today.
“Tomorrow is payoff day,” Marchionne said at the opening of a Fiat dealership in Macomb, Michigan. “Chrysler will again regain its independence.”
Marchionne raised $7.5 billion in loans, junk bonds and a revolving credit line to help pay back the government loans, reported Bloomberg. The face value of debts to the U.S. and Canadian governments was $7.53 billion, according to Chrysler’s Feb. 25 U.S. Securities and Exchange Commission filing.
Repaying the debt would allow Fiat, which now owns 30 percent of Chrysler, to exercise an option to purchase an additional 16 percent stake. Fiat gained control of Chrysler as part of the U.S. automaker’s government-backed restructuring.
Paying off the debt will save Chrysler more than $300 million a year in interest payments, Marchionne said.
Fiat may have 160 U.S. dealers open by the end of the year, Marchionne said. The brand will introduce a second model for the U.S. next year, joining the Fiat 500 subcompact, he said, adding that he hopes Fiat “will become a significant part of the American auto landscape.”
Marchionne has said he expects to gain an additional 5 percent stake in Chrysler by the end of the year, giving Turin, Italy-based Fiat a 51 percent stake.
Fiat can get as much as 76 percent of Chrysler by exercising options to acquire shares owned by the United Auto Workers union’s retiree health-care trust, Marchionne said.
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