Chrysler is expected to announce on Thursday its refinancing package for bankruptcy-related loans from the U.S. and Canadian governments amounting to $6.6 billion, a source told The Associated Press. According to Bloomberg News, these loans have effective interest rates that can go as high as 20%, most of which will mature in 2017.
AP said that these cost Chrysler about $1.23 billion in interest payments in 2010. AP also said that the new package may include new loans and bond sales.
Chrysler CEO Sergio Marchionne has not kept his dislike for the loan terms a secret. Last February, Marchionne described the terms as “shyster rates” but he did later apologize, saying that being the only parties who want to underwrite the risk linked to Chrysler’s recovery plan, the two governments levied interest rates that were appropriate at the time but “are above current market conditions.”
AP said that the financing will be announced on Thursday but it’s likely that the details won’t be revealed until May 2, which is when Chrysler is scheduled to release its first-quarter earnings.
Chrysler spokeswoman Eileen Wunderlich declined to make a comment. Likewise, a Treasury spokesman refused to confirm or deny this matter too. AP reported that Chrysler has had talks about refinancing with Morgan Stanley, Goldman Sachs Group, Citigroup and Bank of America.
Treasury Secretary Timothy Geithner is slated to talk to the Detroit Economic Club on Thursday about the economy but it remains uncertain if Geithner will mention the Chrysler refinancing.