Chyrsler to repay 2009 US and Canadian Government Bailouts

Chyrsler to repay 2009 US and Canadian Government Bailouts image

Text: / Photos: | posted April 29, 2011 16:17

(Soon to be) back in black

After the nightmare scenario of after the recent global automotive and financial crisis, as well as the embarrassing bankruptcy and bailout that followed, the Chrysler Group just release a statement that announces their intent to complete the payment to the U.S. Department of the Treasury, the Canadian federal and Ontario local governments soon.

In the statement, the Chrysler Group intends to complete the repayment during the second quarter of 2011 from proceeds of a new term loan facility and newly issued debt securities to be offered and sold to institutional investors in a private offering exempt from registration under the U.S. Securities Act of 1933. The Chrysler Group intends to use the net proceeds of the term loan and the offering, together with the proceeds from the recently announced exercise by Fiat of an option to acquire an incremental ownership interest in Chrysler Group, to repay its loans from the U.S. and Canadian governments in full and to pay related fees and expenses. The completion of the offering, the credit facilities and the equity investment by Fiat under its call option are expected to occur concurrently.

Presumably the new loan that the Chrysler acquired comes at a lower interest rate compared to the one with the various governments involved with the bailout. That, combined with the uptrend that Chrysler Group's brands - Chrysler, Jeep, Dodge- have experienced (a 22% increase over the same period last year), the new announcement signals that the Chrysler Group is working hard to recover from 2009's Chapter 11, and bring in a new age of profitability for one of America's Big Three.