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February 7, 2011

US: Marchionne apologises for ‘shyster’ comment

Chrysler and Fiat chief Sergio Marchionne has apologised for describing the high-interest bailout loans extended by the US and Canadian governments in 2009 as "shyster loans".

Chrysler and Fiat chief Sergio Marchionne has apologised for describing the high-interest bailout loans extended by the US and Canadian governments in 2009 as “shyster loans”.

The chief executive said in a statement: “In responding to a question about Chrysler ‘s government loans, I used a term in reference to the interest rate being charged on our government loans that has raised concern. I regret the remark which I consider inappropriate.”

Shyster is a derogatory term used to describe an unprincipled professional. Marchionne used the term at least three times in his remarks during the North American Dealers Association convention in San Francisco on Friday.

In 2010, Chrysler paid US$1.23bn in interest payments on its debt. It is seeking to refinance those loans before a planned initial public offering in the second half of this year.

In his statement, Marchionne said the company was grateful for the financial assistance from the US and Canadian governments at a time when the company had no other options. The loans were part of a bailout to keep the automaker from collapse.

Chrysler is now under Fiat management control having emerged from bankruptcy in June 2009. Fiat holds a 25% stake in the US company.

On Friday Marchionne had said: “I want to pay back the shyster loans. Pay back the loans, get those out and then take (the company) public.”

He added that the high interest rates have been an obstacle in Chrysler ’s return to profitability.

Marchionne said Chrysler was in the final stages of discussions with the Department of Energy on its application for up to US$3.5bn in loans. A deal in principle to access the new loans was still possible by March, he added.

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