Cheap Cars

Chrysler, which almost didn’t survive the Great Recession, would like to repay its government debt before the automaker’s two-year anniversary of its emergence from Chapter 11 bankruptcy on June 10, Chrysler and Fiat CEO Sergio Marchionne said Sunday. Previously, Marchionne had said it would refinance its debt and pay off its $7.5 billion in government loans by the end of the second quarter, or June 30. Reuters, on Friday, said Chrysler could complete the refinancing by May 24, according to Chrysler’s offering memorandum sent to banks. But Chrysler is moving quickly given its newfound success. Last week, Chrysler announced that it earned $116 million from January-March – its first since emerging from bankruptcy. In 2010, Chrysler lost $652 million. Chrysler’s rebound is an example of what can be achieved with commitment, rigorous work and a clear set of values, Marchionne told more than 900 students during a commencement speech at the University of Toledo. “Hopefully … less than two years after we received government support, we will repay every dollar that was lent to us by the American and Canadian governments, with interest,” Marchionne said. Chrysler still owes the U.S. and Canadian governments $7.5 billion. Chrysler is seeking to issue $2.5 billion in new debt to institutional investors and secure a $3.5-billion, six-year loan and a $1.5-billion line of credit. Marchionne wants to repay the government debt so Chrysler can reduce its annual interest payments, shed the stigma of partial government ownership and Fiat can increase it’s stake in Chrysler. Marchionne met with bankers in New York last week and will meet this week with high yield investors interested in investing in Chrysler’s debt securities, Marchionne told the Free Press after his speech. Once the refinancing is complete, Fiat plans to invest $1.27 billion in Chrysler and increase its ownership of the Auburn Hills automaker from 30% to 46%. “Two years ago Chrysler had been handed a death sentence by the vast majority of financial analysts, the press and even the general public,” Marchionne said. “We rolled up our sleeves and worked intensely to transform our company and our culture.” During his wide-ranging commencement address, Marchionne urged students graduating from the University of Toledo to strive for more than just personal achievement and quoted former South African President Nelson Mandela. “His words are worth repeating,” Marchionne said. “‘Is globalization only to benefit the powerful and the financiers, speculators, investors and traders?’” Marchionne, 58, called on students to be aware of the depth of global poverty and the importance of political events in the Middle East that are delivering freedom to people previously ruled by repressive governments. “We have a duty to commit what we are able to do to contribute our individual skills and talents … .to achieve higher objectives,” Marchionne said. “You are tomorrow’s leaders and as such you have a duty to expand your minds and look beyond the walls of your office.” About 900 students along with thousands of family members attended the morning graduation ceremony. Another 900 were expected for a separate afternoon ceremony. Marchionne also took note of Chrysler’s long history in Toledo, where it employs about 2,500 workers at three plants. “Generations of Toledo residents have worked for Chrysler,” he said. “Toledo is the birthplace of the legendary Jeep, which was created years ago as a go-anywhere, do-anything vehicle for the American military in World War II,” he said. Contact BRENT SNAVELY: 313-222-6512 or bsnavely@freepress.com

View full post on All Stories