WASHINGTON -- Chrysler plans to announce Thursday a refinancing package for its $6.6 billion in loans from the U.S. and Canadian governments stemming from the company’s 2009 bankruptcy, The Associated Press reported, citing “a person briefed on the matter.”
The loans have effective interest rates as high as 20 percent, with most due to mature in 2017, Bloomberg News has reported. They cost Chrysler $1.23 billion in interest payments last year. The new package could include new loans and bond sales, AP reported.
Chrysler CEO Sergio Marchionne has made clear his contempt for the loan terms. In February, he referred to the terms as “shyster rates.” He later apologized for the comment.
“As the only parties willing to underwrite the risk associated with Chrysler’s recovery plan, the two governments levied interest rates that, although appropriate at the time, are above current market conditions,” Marchionne said in the statement apologizing for his earlier remark.
While Chrysler plans to make a Thursday announcement about the refinancing, it likely won’t release details until Monday, May 2, when the company announces first-quarter earnings, AP reported.
A Chrysler spokeswoman declined comment on the AP story.
“Nobody here spoke with AP,” company spokeswoman Eileen Wunderlich said.
A Treasury spokesman also declined comment.
Energy loans
The Wall Street Journal reported today the refinancing will also help Chrysler secure Department of Energy loans to retool factories.
Chrysler hopes the deal will ease DOE concerns about the automaker and allow the federal agency to grant the company as much as $3.5 billion in low-interest loans. The money would be used to refit Chrysler plants to build more fuel-efficient vehicles - a priority of Obama's.
The DOE has been reluctant to provide Chrysler the financing amid concerns about the automaker's long-term financial health, the Journal said.
Ford Motor Co. has received DOE loans to refurbish factories, but General Motors recently withdrew a request for similar loans.
Chrysler has been negotiating the refinancing with Morgan Stanley, Goldman Sachs Group, Citigroup and Bank of America, AP reported.
Separately, Treasury Secretary Timothy Geithner is scheduled to speak to the Detroit Economic Club Thursday about the economy. It was unclear today if Geithner would discuss the Chrysler refinancing.
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