Chrysler Raises the Money to Repay Government Loans

At the end of April, American manufacturer Chrysler announced that it has managed to secure new term loan facility that, combined with the money to be paid by Fiat in exchange for an increase of its stake in the producer ($1.27 billion), would allow it to repay the loans it has received from the American and Canadian government as part of the 2009 bailout measures.

Now, Chrysler has confirmed that it is on track to repay the loans in their entirety, as the negotiations with the banks have ended. Combined with the money Chrysler will raise from selling secured senior debt securities, Chrysler says it has raised the $7.5 billion needed to be paid, complete with related fees and expenses. Chrysler is expected to give back the money to the two governments in the second quarter of the year.

Since the 2009 bankruptcy, Chrysler owes $5.8 billion to the US and $1.7 billion to the Canadian governments. The car maker has been in talks with four different banks for a refinancing loan, and apparently the confidence Fiat is displaying, as an investor, in the American business, has managed to convince them Chrysler is worth a loan.

Changing one loan for another might not do much for Chrysler, financially speaking, but it may help boost its image as it will no longer owe anything to the American taxpayers.

Since the initial involvement with Chrysler, Fiat has managed to raise its stake considerably. The Italians will soon own 46 percent of Chrysler, 30 handed to them by the US government in exchange for some much-needed Fiat help and 16 percent more purchased by Fiat last month.