Chrysler's Plan to Pay Off Government Loans

May 20, 2011
A $7.5 billion refinancing plan

Chrysler on May 19 detailed a $7.5 billion refinancing plan that will allow it to pay off government loans and expand Fiat's stake in the U.S. automaker.

Chrysler said the $3.2 billion bond issuance, $4.3 billion in loans and the Fiat equity investment will close on May 24.

Chrysler and General Motors, the biggest US automaker, required government rescues and underwent bankruptcy reorganizations to survive a severe slump in U.S. auto sales during the 2008-2009 financial crisis.

Fiat has been steering the company after taking a 20% stake as the carmaker emerged from bankruptcy in June 2009.

Fiat has raised its stake in Chrysler twice this year, in January to 25%, and in April to 30%.

It took a step toward becoming one of the biggest automakers in the world with a $1.3-billion deal to raise its stake in Chrysler to 46% announced April 21.

The Italian automaker said it expected to increase its stake to 5% before the end of 2011.

Chrysler posted its first post-bankruptcy quarterly net profit on May 2 of $116 million for the first quarter, compared with a net loss of $197 million in the year-ago period.

Copyright Agence France-Presse, 2011

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