Chrysler Group LLC completes refinancing and repays US and Canadian government loans
24 May 2011
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.
When you consider all the jobs, suppliers, business and homes that were saved, helping them made all kinds of sense for the country. We could account for all the loses if the "let them fail" crowd had their way, but they will never admit that no matter how much credible evidence is shown.
Posted by: SJC | 24 May 2011 at 11:45 AM
This is the second time Chrysler has been resuscitated. Turned out to be a wise investment in maintaining and growing manufacturing. Which is another sugstainable goal: rebuild manufacturing in North America. We need to start making stuff again. Cars, planes, boats, furniture, shoes, clothes, etc.
Part of the sustainable profile is to be able to build the stuff we use - at home. Not all of it. But enough so there are good manufacturing jobs available again. We cannot survive on IP, and services alone. North America has to start building things again.
In the energy sector we can start by building EVs and PHEVs alongside the ICEs. And we can build the new breed of CHP appliances. And why not build out the HS Rail system, and maybe even some consumer electronics.
By the time we add in the cost of lost jobs, damage to economy, cost of fuel and enviro damage - shipping jobs overseas is not so smart. The US was built on innovation - and innovative manufacturing. It's time to water those roots.
Posted by: Reel$$ | 24 May 2011 at 12:50 PM
So...why was Chrysler in such a hurry to repay early? I know with the bailed out banks there were provisos that executive bonuses were severely curtailed until the US got repaid...beautiful codicil in my opinion.
Posted by: HealthyBreeze | 24 May 2011 at 02:17 PM
They saved more than $300 million per year on lower interest.
Posted by: SJC | 24 May 2011 at 02:58 PM
Like a representative, I might have missed a bribe.
Chryisler produced what exactly?
Posted by: kelly | 24 May 2011 at 04:56 PM
I hope chrysler goes on to prosper again. They have come back from the dead before. They had a legacy of innovation and this time I hope they can lead in PHEV's / EV's.
Posted by: danm | 25 May 2011 at 10:21 AM
They need something in the Cruze/Focus category. The 200 will help, but they are not going to make it with RAM pickups nor Durangos. They are so late to the party, they have no credibility in hybrids.
Posted by: SJC | 25 May 2011 at 11:46 AM
Their first re-birth was the K-car.
Will the second re-birth be th Fiat 500 or electrified vehicles?
Posted by: HarveyD | 27 May 2011 at 04:47 PM
I saw my first Fiat 500 on the highway today. I was driving at 10 kph above the legal limit to get a speed ticket.
Posted by: HarveyD | 27 May 2011 at 04:51 PM
Correction: should read...I was driving at 10 kph above the legal speed limit and it passed me doing 130+ kph. It looked very small but fast enough to get speeding tickets.
Posted by: HarveyD | 27 May 2011 at 04:54 PM