Chrysler Group LLC will be able to repay its government debt now that it has secured new financing worth $7.5 billion under a bond offering and term loan. In a statement, Chrysler said that it was able to raise $3.2 billion in bonds, $3 billion in a term loan and a $1.3 billion revolving credit line.
Repayment of government loans will be done through the bonds and the term loan, which amount to $6.2 billion, paired with $1.3 billion in cash from Fiat SpA.
Chrysler said that its $1.3 billion revolving credit facility will be undrawn and will be used for general corporate purposes. Due to its bankruptcy and restructuring in 2009, Chrysler owes $7.5 billion to the U.S. and Canada. In a press release, Chrysler said that the refinancing is scheduled to close on May 24.
Sources say that Chrysler had borrowed $200 million more than it initially intended to. These government loans bear high interest rates, which cost the company over $1.2 billion in 2010.
This refinancing will place Chrysler on a more stable financial ground as it prepares for an initial public offering that may take place as soon as this year.
Since Chrysler emerged from bankruptcy two years ago and was placed under Fiat’s control, the U.S. automaker was able to overhaul its lineup as well as reduce costs.