agent Entrepreneur logo
MenuMENU
SearchSEARCH

Chrysler Said To Plan To Borrow $6 Billion To Pay Off U.S. Government Debt

April 27, 2011
3 min to read


Chrysler Group LLC, the U.S. automaker operated by Fiat SpA, is planning to borrow about $6 billion to pay off government debt as Fiat moves to increase its ownership, people familiar with the plan said.


Details are still being completed on the debt and may be announced as soon as next week, said the people, who asked not to be identified revealing private plans. Chrysler has said its effective interest on the borrowings from the U.S. is as high as 14 percent and as much as 20 percent on the Canadian debt, reported Bloomberg.

Ad Loading...


Reducing the interest expense should improve profits. Sergio Marchionne, chief executive officer of both automakers, is slated to release Chrysler’s first-quarter results on May 2. He is pushing Chrysler to earn as much as $500 million this year, its first annual profit since emerging from bankruptcy reorganization in 2009.


Eileen Wunderlich, a spokeswoman for the Auburn Hills, Michigan-based automaker, declined to comment on refinancing plans.


The refinancing plan includes $1.27 billion from Fiat as part of its plan to execute an option to increase its ownership stake to 46 percent from 30 percent after the governments are repaid, said the people familiar with the plan.


The face values of the debts to the U.S. and Canadian governments are $7.53 billion, according to Chrysler’s Feb. 25 Securities and Exchange Commission filing. Those debts must be repaid before Marchionne can exercise his option to purchase the 16 percent stake.


Fiat said last week it aims to exercise that option in the second quarter. The automaker may hold an initial public offering this year or next year, Marchionne has said.

Ad Loading...


The new debt may be a mixture of loans and bonds, the people said. Marchionne wants it completed by the end of May and Chrysler executives may begin a roadshow soon after the announcement to pitch the debt as an investment, they said.


Chrysler is also expected to get about $2 billion in revolving loans, one of the people said.


Fiat gained control of Chrysler as part of the U.S. automaker’s government-backed restructuring. In exchange for sharing management and technology and for reaching operational milestones, Fiat receives as much as 35 percent of Chrysler. It currently has 30 percent. Marchionne has said he expects to get the final 5 percent by the end of the year.


In conjunction with the purchase option, the Turin, Italy- based automaker would hold a 51 percent stake.


Chrysler’s capital infusion may give the U.S. Department of Energy “additional comfort” about the automaker’s financial structure, Marchionne told analysts last week. He said that he expects that after the Fiat stake increase is completed, Chrysler will be able to make progress and obtain as much as $3.5 billion in low-interest loans.

More Industry

Two white men's shaking hands
Industry•October 15, 2026

Penske Auto Group Deal a Record

The deal to take the dealership and transportation services company private sets a new pace for industry buy-sell transactions.

Read More →
Rows of cars parked in exterior lot
Industry•by Hannah Mitchell•October 8, 2026

War Toll a Damper on Used Auto Prices

Cox Automotive found wholesale depreciation to be elevated in September amid high fuel prices and this year's unusual hurricane season.

Read More →
Mechanic cleaning interior of engine
Industry•by Lauren Lawrence•October 8, 2026

Bridge the Maintenance Gap

With many drivers missing recommended maintenance, service departments offering transparency and efficiency have a better chance of reaching financially strained consumers.

Read More →
Ad Loading...
Ford F-150 truck rounding a curve
Industry•by Hannah Mitchell•October 1, 2026

California Store Has New Owner

The longtime dealership in the northern part of the state is known for robust fleet sales and has served the state capital for 115 years.

Read More →
crane lowering a pipeline into the ground
Industry•by Lauren Lawrence•October 1, 2026

BMW Plant Pursues Cleaner Energy

BMW Group Plant Leipzig has utilized hydrogen to help power its production since 2013, but a new pipeline is planned to take it to another level.

Read More →
Two dodge cars outside of dealership.
Industry•by Lauren Lawrence•September 17, 2026

Auto Affordability Inches Up

The latest Cox Automotive and Moody’s Analytics index shows a slight increase in new-vehicle affordability despite high prices.

Read More →
Ad Loading...
Five men smiling for photo in front of Honda car dealership.
Industry•by Lauren Lawrence•September 10, 2026

Ohio Auto Group Under New Ownership

After 79 years with the Schluter family, Mansfield Auto Group has been acquired by Missouri-based Clement Auto Group.

Read More →
Blue and white RV parked on beach facing the ocean.
Industry•by Lauren Lawrence•September 3, 2026

RV Group Expands Carolina Footprint

Blue Compass RV Columbia Northeast is the 13th RV dealership owned by Blue Compass in the Carolinas.

Read More →
Photo of two men and one woman on a discussion panel
Industry•by Hannah Mitchell•September 1, 2026

Agent Acumen

An Agent Summit panel of people who’ve been supporting auto dealers for years gave both timely and timeless advice for those starting out or mulling the prospect.

Read More →
Ad Loading...
Gloved hand holding two wrenches next to “Turn Overdue into Opportunity” Graphic
Industry•by Lauren Lawrence•August 27, 2026

Missed Maintenance Creates Opportunity

As families get back on the road and into daily school routines, service drives have an opportunity to capture customers who are behind on recommended vehicle maintenance.

Read More →
Ad Loading...