Chrysler Group LLC has withdrawn its application to access up to $3.5 billion in loans from the U.S. Department of Energy, saying the terms would negatively affect the company. The carmaker filed today a one-sentence notice with the U.S. Securities and Exchange Commission, signed by Chief Financial Officer Richard Palmer, which says, “[o]n February 16, 2012, Chrysler Group LLC announced its decision to withdraw its Section 136 loan application with the U.S. Department of Energy.”
A Chrysler spokesperson said the DOE’s proposed terms were very restrictive, and compliance would have negatively affected the company’s operational flexibility. The company had sought the financing under the Advanced Technology Vehicles Manufacturing loan program since Congress first approved it in 2007.
The program, with a budget of $25 billion program, reimburses carmakers for expenses they made on upgrading older plants to produce more fuel efficient vehicles.
Chrysler said in a written statement that its decision to withdraw the application will not affect its ability to achieve its previously announced business plan targets. The carmaker’s chief executive Sergio Marchionne, who also heads parent Fiat, expressed frustration with how long it has taken for the US government to decide on Chrysler's funding application.
Chrysler first applied to access up to $7 billion in loans, but had lowered it to below $3.5 billion. Marchionne complained that the non-approval of the funding will put the company “in a very, very uncompetitive position against the other two [automakers] in Detroit," referring to cross-town rivals Ford Motor Co. and General Motors.
He also blasted his Detroit rivals, "One blocked DoE funding and the other one was using equity capital, which is probably even a better substitute than DoE funding at a lower rate,” noting he is the only guy who pays back everything with interest. He added, “I don't want to be favored, I just don't want to be mistreated."