- Chrysler is negotiating new private loans and selling bonds to pay off $7.5 billion in government loans.
- Repaying those loans bolsters its chances of securing an additional $3.5-billion Department of Energy loan.
- The repayment also paves the way for Italian auto giant Fiat to take a larger stake and helps make a case for an IPO.
AUBURN HILLS, Michigan — Chrysler Group said on Thursday it is negotiating new bank loans and will sell bonds to private investors to help pay off $7.5 billion to the U.S. and Canadian governments.
Once it repays the loans, which helped it through a difficult bankruptcy proceeding in 2009, Chrysler should bolster its chances of securing an additional $3.5-billion loan from the Department of Energy. The repayment also paves the way for Italian auto giant Fiat to take a larger stake in Chrysler.
According to the Financial Times, Chrysler's bankers, led by Goldman Sachs, are negotiating the terms of a financial package that would include a $3.5-billion term loan, $2.5 billion in bonds and a $1.5-billion revolving-credit facility. The bonds will be sold privately to institutional investors, Chrysler said.
The automaker, which has been controlled by Fiat since the 2009 bankruptcy, said it "intends to complete the repayment during the second quarter of 2011." Once completed, Fiat has said it intends to raise its stake in Chrysler from 30 to 46 percent and, ultimately, to 51 percent.
Chrysler also is negotiating with the U.S. Department of Energy for a $3.5-billion low-interest loan to finance the development and production of fuel-efficient technologies.
The loan repayment will leave the U.S. government with an 8 percent stake in Chrysler. The largest shareholder remains a health-care trust fund managed by the UAW, which holds a 55 percent stake.
In related news, Treasury Secretary Timothy Geithner spoke at the Detroit Economic Club today and conceded during a question-and-answer session with reporters that the bailout of Chrysler and General Motors will ultimately lose money.
Inside Line says: Chrysler needed to clean up its balance sheet before it could return to the stock market with an initial public offering. — Paul Lienert, Correspondent
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tbone85 says:
04:56 PM, 05/02/2011
"I'd rather support Ameirican families and buy Asian brand names than buy American brand names and support Mexican and Canadian families."
Ding, ding, ding. You win the specious argument of the year. The Asian brands ALL also sell cars in the U.S. that are built in foreign countries. There are also many U.S. brand cars that are manufactured here.
What's more, if the main idea is to support American families, then it is impossible to argue that more U.S. families benefit from the purchase of domestic brands. The HQ locations are a source of additional jobs, taxes, community involvement, etc.
colorado1974 says:
08:57 AM, 05/02/2011
wiki. Sorry but you have ZERO credibility. The 100k warranty is still here. Don't really know what you are talking about.
open: huh, copy and paste your same hate mantra again? Saw it the 4th time you posted it.
Gimmicks eh? Well, interesting that most or all of those gimmicks have been copied by most of the auto industry. Sure thing, those power sliding doors sure are gimmicks.
Hemi engine on Wards 10 best for 10 years now. gimmick.
yawn you guys are boring, outdated, biased and irrelevant. Chrysler's current situation and financial/sales turnaround are proving that.
wikiwiki says:
07:53 AM, 05/02/2011
colorado1974,
My bad. They are behind on anything that really makes a good car. Like engines, powertrain, reliability, efficiency, engineering, etc. How's that 100k mile warranty thing going? That went away rather quickly, didn't it? Like I always said, Chrysler is great at making gimmicks. Everything you listed is a gimmick and has nothing to do with what a good car is about. I'm more interested in buying a well engineered car. Best of luck to you and the gimmick mobiles. There is a reason Chrysler is bottom of the barrel. The people (consumers) put you there but the Gov't stupidly bailed you out (and GM).
openeyes1 says:
09:52 PM, 04/30/2011
colorado1974; Yes you have done a marvelous job of all the wonders of technology that Chrysler introduced, yet you fail to mention the enormous amount of 'problems' that occured with Chrysler's new technologies.
You speak of the wonder of its 200hp 4 cylinder in the Neon and 300hp 4 cylinder in the Caliber, both vehicles pieces of crap. These engines were loud and brash, and the cars cheaply built with rattles galore.
If you think I'm a Chrysler basher you're wrong, having owned a Omni GLH that was a pocket rocket, I'm disgusted by the big gas pigs they produce now. They have wasted their money building large gas guzzling engines, while abandoning the innovative 4 cylinder design's that saved the company in the 80's.
colorado1974 says:
04:13 PM, 04/30/2011
"Chrysler is behind on everything."
I really couldn't really let this one go. It's such an idiotic statement that I couldn't let it go.
first with factory satellite tv
first with bluetooth connectivity
Stow N Go
Cab Forward
radios with hard drives
dual zone temp control
infrared scanning auto a/c
power liftgates
power sliding doors
3 zone temp control
flexible overhead storage racks
adjustable cup holders
windshield de-icer
seamless dash airbags
dynamic side impact protection
integrated child seats
4 wheel abs
This is just the minivan.
first to mass use autostick (tip tronic, range select whatever)
flex fuel
First use of "flash" reprogramming with vehicles's diagnostic tools
Customer programmable automatic door locks
etc etc etc
Do I really need to go on? Do some research. It often help give the illusion that you know what you're talking about.
colorado1974 says:
02:32 PM, 04/30/2011
ah, the wiki troll. no GM or Chrysler article would be complete without your hilarity.
Your comments on 4 cylinders are only but half-truths. While Chrysler is recovering from being gutted by Daimler and Cerberus, they do have decent 4 cylinders. It only depends on what is more important. While the other companies deliver better mileage, Chrysler's 4 cylinders deliver more power. Don't forget, the Neon's SRT was the first 4 cylinder with well over 200 hp and the SRT4 Caliber had almost 300. Sure the Evo had that but it was over $10k more.
Considering that Fiat knows a thing or two about fuel efficiency, I'd say we're in good hands. They are also the diesel technology leader in the world as well. We'll be OK. All you need to do is come up with another subject in which to throw a tantrum about.
wikiwiki says:
01:47 PM, 04/30/2011
Chrysler is behind on everything. They just finally made a V6 that is almost respectable but not quite. But the future is in 4 cylinders now and they have nothing that I have seen or read about that can compete with Ford or GM let alone the 4 cylinder masters over in Asia. It's a pig company that should have been left to die. GM as well. Ford is the only American car company that I can respect and MIGHT consider buying from in the future...but probably won't. I'd rather support Ameirican families and buy Asian brand names than buy American brand names and support Mexican and Canadian families.
ambee514 says:
06:50 AM, 04/30/2011
Good job Chrysler, cut the strings of the government cash!
colorado1974 says:
11:45 PM, 04/29/2011
Ha, here we go.
GC. You used the Hemi. I didn't. Nice try.
Charger RT = 25. Crosstour = 26. Hmmm. Hemi vs V6. nice.
200 = 29. Accord = 30. Splitting hairs are we?
Compass = 29. CRV = 28. 2wd.
Ram 5.7 = 20. Tundra 5.7 = 18. 2wd
Journey = 25. Rav 4 = 27. Splitting hairs. Journey has more power. More Tech.
300? I was quoting mpg with the new tranny this fall.
Yup, they are all pretty awful alright.
Who's in Colorado? You?
How can the Fiat 500 save Chrysler? It isn't a Chrysler. What's next? The Honda Ridgeline won't save Acura...neither will the Ford Escort. Besides, if anybody thought the Fiat 500 would save anything or anybody, they are mistaken. It was a cheaper, more inspired alternative to the Mini, which has gotten fat and expensive in the last 10 years.
This fall we get a 40+mpg sedan for Dodge and a Dakota replacement that is targeted at 30 mpg.
openeyes1 says:
09:16 PM, 04/29/2011
@colorado1974, I thought I'd post the generous MPG from the federal fuel economy guide 2011, for your listed cars.
Grand Cherokee 13/19 MPG.
Dodge Charger RT 16/25 MPG.
Chrysler 200 19/29 MPG.
Jeep Compass 20/23 MPG
Ram 13/19 MPG.
Journey 16/24 MPG.
300 18/27 MPG.
Some of these are AWD/4WD, some aren't, given that Colorado gets winter weather I am assuming that AWD/4WD are the better selling vehicles. Only one scores at 20 MPG in the city, the little Compass, the rest are all pretty awful.
The Fiat 500, is unfortunately not the vehicle to save Chrysler, its too small and too underpowered. Chrysler needs to dump crap like the Durango, in favor of a AWD Suzuki Kizashi sized Sedan and Hatchback (they can certainly build cars better than Suzuki). They need a small size Diesel Pickup, with Ford making a huge mistake by ending the Ranger, which has millions of loyal followers.