Chrysler Group LLC announced the repayment of $7.6 billion in outstanding US and Canadian government loans following the completion of new refinancing transactions. The original loans were repaid in full, more than six years ahead of schedule, along with the payment of accrued interest and additional consideration.
Today, Chrysler made payments of $5.9 billion to the US Treasury (UST) and $1.7 billion 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 $5.1 billion from the UST and $1.6 billion from the Canadian governments in June 2009 ($2.6 billion from the original loan facilities was undrawn and the facilities will be canceled). In total, Chrysler Group has paid the UST $6.5 billion and the EDC $2.0 billion, 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. 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.—Sergio Marchionne, CEO, Chrysler Group LLC
Chrysler Group confirmed the completion of new financing transactions consisting of a term loan totaling $3.0 billion, debt securities totaling $3.2 billion and a revolving credit facility of $1.3 billion. The new financing will save Chrysler Group an estimated $350 million a year in interest expenses.
The company used the net proceeds from the term loan and bonds, together with $1.3 billion from an equity call option exercised by Fiat for an incremental 16% fully diluted ownership interest, to repay the government loans. The revolving credit facility remains undrawn.
Chrysler Group continues to have more than $10 billion in liquidity after the refinancing and loan payoffs, which includes the undrawn revolving credit facility.
Goldman, Sachs Co. advised Chrysler Group on structuring the financings and Evercore Partners advised Chrysler’s Finance Committee.