Chrysler is set later today (24 May) to announce the repayment of US and Canadian government loans at an event at its Sterling Heights Assembly Plant in Michigan attended by group CEO Sergio Marchionne, assistant to President Obama for manufacturing policy Ron Bloom, deputy director of the National Economic Council, Brian Deese, and government officials, UAW representatives and employees.
Marchionnes has said paying off the loans would save Chrysler over US$300m a year in interest payments and allow Fiat to raise its stake to 46%.
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Chrysler raised $7.5bn in new loans last week. Much of that money, along with $1.3bn in cash from Fiat, will go toward repaying some $5.9bn in loans and interest to the US government and $1.6bn in loan debt to the Canadian government, Reuters noted.
Marchionne on Monday said the refinancing was a sign of Wall Street’s confidence in Chrysler about two years after it emerged from its US-funded bankruptcy and took a federal bailout.
“They (investors) know that we’re here to stay, and a lot of them were and are betting on the fact that we’re going to be here for a long time,” Marchionne said at the opening of Fiat’s first Michigan dealership in suburban Detroit.
“It is our expectation tomorrow that Chrysler will begin to regain its independence, its accountability to the public markets, as part of the long and painful restructuring process that began back in 2008,” Marchionne said.
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By GlobalDataWhen asked about the timing of the IPO, he told Reuters discussions needed to take place with the healthcare trust affiliated with the United Auto Workers union, known as the VEBA, which wants to cash out its current majority stake in Chrysler.
“Their objective is money for the trust,” Marchionne said, adding that Chrysler had done a lot of work with the US Securities and Exchange Commission in preparation for an IPO.
Marchionne said that Fiat’s current 30% stake in Chrysler would rise to 46% when it pays off the loans.
“It goes up as soon as the money transfers,” he said.
He reiterated that Fiat hopes to boost its Chrysler stake further by the end of the year.
He added that “over time” Fiat could increase its stake to as much as 76% in part by acquiring a portion of the stake held by the VEBA, Reuters reported.
