Following the recent completion of its new independent financial restructuring program, Chrysler Group LLC announced it has fully repaid the $7.6 billion in outstanding loans made to it in June 2009 by the U.S. and Canadian governments. "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."
The statement indicated that Chrysler's payoff -- which was made nearly six years ahead of the required due date -- included $5.9 billion to the U.S. Treasury (UST) and $1.7 billion to Export Development Canada (EDC), the holding company through which the Canadian federal and Ontario provincial governments extended loans to Chrysler Group. Those figures rise to $6.5 billion and $2.0 billion, respectively, when an additional $1.8 billion in interest and other consideration are factored into the mix. As a result of the action, the U.S. government now holds just 6.6 percent of the Chrysler Group LLC shares and the EDC 1.7 percent. Analysts believe those positions would be liquidated when the firm tenders an IPO and goes public, an event that now seems likely within the next year or so.
Marchionne also confirmed details of the replacement financing deal that's now in place, which consists a $3.0 billion term loan, $3.2 billion in debt securities and a $1.3 billion revolving line of credit facility. He indicated this new financing will save the automaker an estimated $350 million a year in interest expenses and that Chrysler Group continues to have more than $10 billion in liquidity after completing the refinancing and loan payoff process. The deal also will allow Fiat, which has controlling interest in Chrysler Group LLC, to raise its overall ownership stake in the operation from 30 to 46 percent.
"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," stated Marchionne.
During the first quarter of 2011, improved sales allowed Chrysler Group LLC to record its first net profit since it emerged from Chapter 11 bankruptcy in June 2009.