WHITE MARSH, Md. (Reuters) -- The Obama administration is "hopeful" Chrysler Group LLC will qualify for government loans to help make more fuel-efficient vehicles, but the automaker still has hurdles to clear with banks and investors.
Energy Secretary Steven Chu told Reuters today that it is premature to say whether Chrysler's application has met the technical standards to merit aid from the agency.
Chrysler took a bailout at the height of the financial crisis in 2009 and is now in the process of refinancing about $7.5 billion in loans owed to the United States and Canada.
Once the debt is refinanced, there will be greater clarity on whether the company will receive a loan from the U.S. Department of Energy, Chu said at an event outside Baltimore where General Motors broke ground on an electric motor facility.
"We'll see how it goes," Chu said. "They will decide what they want to do."
The Energy Department loan program was established by Congress to help U.S. and other automakers retool old factories to make more fuel-efficient vehicles, including gasoline-electric hybrids and plug-in electric cars.
Ford Motor Co. and Japan's Nissan Motor Co. have received loans. GM withdrew its application earlier this year after bolstering its finances with an initial public offering in November.
GM's electric motor plant will be dedicated to making critical components for vehicle electrification when the plant opens in 2013.
GM received $50 billion in bankruptcy and bailout assistance, also in 2009. The U.S. Treasury owns about a third of GM and less than 10 percent of Chrysler, which is operated by Italy's Fiat SpA.
That money was extended during Chrysler's bankruptcy in 2009 from the government's corporate bailout fund, the Troubled Asset Relief Program.
Chrysler applied for $3.5 billion in loans from the DOE to retool its plants and build more energy-efficient vehicles.
In late April, Chief CEO Sergio Marchionne said the loans would allow Chrysler to make "step changes" to transform its truck-heavy lineup.
Marchionne also said last month that he expected approval for the DOE loans to come "relatively quickly" after Fiat bought a 16 percent stake in the U.S. automaker.
The cash infusion should provide "additional comfort" to the agency regarding Chrysler's financial stability, he said.
Applicants for the loan program must make, or make parts for, advanced technology vehicles, according to the Energy Department website. Applicants must also be financially viable without needing additional federal funding for a project other than the DOE loan.