US: Chrysler repays US and Canadian government loans
Debts repaid: Marchionne makes the announcement in Sterling Heights, Michigan, on Tuesday
Chrysler Group last night announced it had repaid US$7.6bn in outstanding US and Canadian government loans following the completion of refinancing.
The original loans were repaid in full, over six years ahead of schedule, along with the payment of accrued interest and additional consideration.
Chrysler on Tuesday made payments of $5.9bn to the US Treasury and $1.7bn to Export Development Canada (EDC) to retire the loans granted when Chrysler Group began operations in June 2009. EDC is the holding company through which the Canadian federal and Ontario provincial governments extended loans to Chrysler Group.
The Company borrowed $5.1bn from the US Treasury and $1.6bn from the Canadian governments in June 2009 ($2.6bn from the original loan facilities was undrawn and the facilities will be cancelled). In total, Chrysler Group has paid the Treasury $6.5bn and the EDC$2bn, including $1.8 billion in interest and additional consideration.
“Less than two years ago, we made a commitment to repay the US and Canadian taxpayers in full and today we made good on that promise,” said Chrysler CEO Sergio Marchionne at an event at the company's Sterling Heights assembly plant in Michigan.
“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.
“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.”
Chrysler Group confirmed the completion of new financing transactions consisting of a term loan totaling $3bn, debt securities totaling $3.2bn and a revolving credit facility of $1.3bn. The new financing will save Chrysler Group an estimated $350m a year in interest expenses.
The Company used the net proceeds from the term loan and bonds, together with $1.3bn from an equity call option exercised by Fiat for an incremental 16% ownership interest, to repay the government loans. The revolving credit facility remains undrawn.
Chrysler said it has over $10bn in liquidity after the refinancing and loan payoffs, which includes the undrawn revolving credit facility.
“Everyone in the extended Chrysler Group family, from employees to union partners to dealers and suppliers, have worked tirelessly to deliver on our promises and to win back public trust in the company and our products," said Marchionne. "There is more work to be done as we remain focused on fulfilling the goals outlined in our 2010-2014 business plan.”