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Chrysler repays government loans

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Sergio Marchionne, Chief Executive Officer, Chrysler Group LLC

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29th May, 2011

  • More than six years ahead of schedule, Chrysler Group fulfils promise to taxpayers and repays original government loans totalling US$6.7 billion, in addition to US$1.8 billion of interest and other consideration
  • Intervention by U.S. and Canadian governments and strategic alliance with Fiat leads to 16 all-new or significantly refreshed vehicles currently in dealerships; more than US$3 billion in facility upgrades
  • Companyís return to profitability and double-digit worldwide sales increases show new product line-up gaining momentum in marketplace

Chrysler Group LLC last week announced the repayment of US$7.6 billion in outstanding U.S. and Canadian government loans following the completion of new refinancing transactions. The original loans were repaid in full, more than six years ahead of schedule, along with the payment of accrued interest and additional consideration.

The company made payments of US$5.9 billion to the U.S. Treasury (UST) and US$1.7 billion to Export Development Canada (EDC) to retire the loans granted when Chrysler Group began operations in June 2009. EDC is the holding company through which the Canadian federal and Ontario provincial governments extended loans to Chrysler Group.

The company borrowed US$5.1 billion from the UST and US$1.6 billion from the Canadian governments in June 2009 (US$2.6 billion from the original loan facilities was undrawn and the facilities will be cancelled). In total, Chrysler Group has paid the UST US$6.5 billion and the EDC US$2.0 billion, including US$1.8 billion in interest and additional consideration.

"Less than two years ago, we made a commitment to repay the U.S. and Canadian taxpayers in full and today we made good on that promise," said Sergio Marchionne, Chief Executive Officer, Chrysler Group LLC. "The loans gave us a rare second chance to demonstrate what the people of this Company can deliver and we owe a debt of gratitude to those whose intervention allowed Chrysler Group to re-establish itself as a strong and viable car maker."

"Paying back the loans, along with the financial communityís investment in our refinancing packages, marks another step in the Company returning as a competitive force in the global automotive industry."

Chrysler Group confirmed the completion of new financing transactions consisting of a term loan totalling US$3.0 billion, debt securities totalling US$3.2 billion and a revolving credit facility of US$1.3 billion. The new financing will save Chrysler Group an estimated US$350 million a year in interest expenses.

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The Company used the net proceeds from the term loan and bonds, together with US$1.3 billion from an equity call option exercised by Fiat for an incremental 16 per cent fully diluted ownership interest, to repay the government loans. The revolving credit facility remains undrawn.

Chrysler Group continues to have more than US$10 billion in liquidity after the refinancing and loan payoffs, which includes the undrawn revolving credit facility.

"Everyone in the extended Chrysler Group family, from employees to union partners to dealers and suppliers, have worked tirelessly to deliver on our promises and to win back public trust in the Company and our products," said Marchionne. "There is more work to be done as we remain focused on fulfilling the goals outlined in our 2010-2014 business plan."

About Chrysler Group LLC

Chrysler Group LLC, formed in 2009 from a global strategic alliance with Fiat S.p.A., produces Chrysler, Jeep, Dodge, Ram, Mopar and Fiat vehicles and products. With the resources, technology and worldwide distribution network required to compete on a global scale, the alliance builds on Chrysler Groupís culture of innovation, first established by Walter P. Chrysler in 1925, and Fiatís complementary technology that dates back to its founding in 1899.


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