Chrysler paying Feds back next Tuesday...

[LS2JSTS]

Looks like Chrysler is going to work a bond sale/private loan deal into enough cash to repay the US and Canadien Feds off. With Fiats additional investment it will bring their stake in the company to 46%.


Chrysler to repay loans Tuesday


"Chrysler is expected to repay $7.5 billion in government loans on Tuesday, according to people familiar with the planning.

The move would come days before Chrysler's two-year anniversary of emerging from government-backed bankruptcy on June 10, 2009.

Chrysler spokeswoman Eileen Wunderlich declined to comment.

But today, the Auburn Hills automaker is expected to announce the terms of a $3.5-billion bond sale, a major step toward repaying the $5.8 billion it owes the U.S. Treasury and the $1.7 billion it owes Canada and Ontario."

 

[JHZR2]

Excellent

 

[sasilverbullet]

Good, now we can't call them "government motors" anymore!

 

[OVERKILL]

Originally Posted By: sasilverbullet
Good, now we can't call them "government motors" anymore!


That acronym was for GM.......

 

[Tempest]

Quote:
Chrysler also is negotiating with the U.S. Department of Energy for a $3.5-billion low-interest loan to finance the development and production of fuel-efficient technologies.

The loan repayment will leave the U.S. government with an 8 percent stake in Chrysler. The largest shareholder remains a health-care trust fund managed by the UAW, which holds a 55 percent stake.

http://www.insideline.com/chrysler/chrysler-borrows-money-to-pay-off-government-loans.html

It seemingly never ends.

 

[Samilcar]

They need to privately borrow $6 Billion in order to pay back $7.5 Billion to the government? Good for the American (and Canadian)taxpayers. Now if we can just keep them from running back to Uncle Sugar the next time they can't pay their bills.

 

[LS2JSTS]

Originally Posted By: Samilcar
They need to privately borrow $6 Billion in order to pay back $7.5 Billion to the government?


Well, yes and no.

They are going to sell bonds valued at 3.5 billion, no loan there, unless they do a BO style BK again...lol.
And, yes, borrow 2.5 billion from a group of private banks.
As well as a further 1.3 billion dollar investment from Fiat.


--------------------------------------------------------------------------------------------------------------------

As far as the linked article regarding the potential loan for future development, that is a completely seperate issue. To include that loan, that wont even be in place at the time this payoff takes place, into that article exposes a certain bias imo. One has absolutely nothing to do with the other, so why cloud the issue?

The loan for future development, which is similar to deals at other domestic manufacturers is actually a fair and just distribution of the costs attached to the not easily achieved improvements that are mandated on the manufacturers by the Federal government. The new EPA and CAFE standards aren't going to be achieved at any small cost to the manufacturers and the cost mandated by their enforcement should be shouldered to some extent by the people doing the mandating, at least imo.

The government remains unwilling/unable to legislate demand of certain vehicles, yet at the same time they demand unachievable corporate average fuel economies. It puts the manufacturers into a quandry. The people buy what they can afford and want, yet the manufacturers are faced with huge federal fines if they don't meet the CAFE standards. As long as the government remains intransegent to legislating what people should be driving, or taxing gasoline at a level that would shift market demands. Then imo, they should at least shoulder some of the high costs associated with the technology being required to achieve THEIR demands.

The feds can't legislate that a State assume a cost without renumeration, why shouldn't the same hold true for a company? The costs are due to their demands/legislation and regulations. So shouldn't they also bear some of the cost?

IMO, you should be glad it's a low interest LOAN and not a straight up subsidy...the feds are getting off cheap!

 

[LS2JSTS]

On a side note....something doesn't add up here.

I see:

Fiat 46%
Feds 8%
VEBA 55%


Insideline math at it's best. I suspect the Fed number is WAY off, as it is true that the VEBA will remain the largest stakeholder.

 

[Tempest]

Same math at Motor Trend:
http://wot.motortrend.com/hear-chrysler-repay-government-loans-next-tuesday-79475.html
Quote:
the feds are getting off cheap!

Not hard when you make the rules.

 

[LS2JSTS]

Well, not exactly.

MT says Feds will still hold even more at 8.6% and they dont mention the VEBA stake at all.

MT also notes Fiats stake will rise to 46%

So is it the VEBA number that Insideline has wrong?

Unless the new 100% is 109%, something doesn't add up with the Insideline numbers.

 

[Sierra048]

Call me crazy but who in their right mind would want to buy a Chrysler bond after the beating Chrysler bond holders took from this president/government two years ago?

 

[LS2JSTS]

Looks like the terms of the deal have changed a bit...

Borrowing 3.2 billion + a 1.2 billion revolving line
Selling 3.2 billion in bonds
Fiat to invest a further 1.27 billion
Chrysler announces payoff



"The Auburn Hills automaker said it sold $3.2 billion in bonds and obtained a $3.2 billion loan as well as a $1.3 billion credit facility from investors and commercial lenders.
Chrysler said it intends to use the proceeds of the bonds and the loan along with a $1.27 billion investment from Fiat to repay its government loans four years earlier than required under an agreement reached as it emerged from bankruptcy on June 10, 2009."

 

[Spyder7]

Originally Posted By: Tempest
Quote:
Chrysler also is negotiating with the U.S. Department of Energy for a $3.5-billion low-interest loan to finance the development and production of fuel-efficient technologies.

The loan repayment will leave the U.S. government with an 8 percent stake in Chrysler. The largest shareholder remains a health-care trust fund managed by the UAW, which holds a 55 percent stake.

http://www.insideline.com/chrysler/chrysler-borrows-money-to-pay-off-government-loans.html

It seemingly never ends.


Its a loan, implying it will be paid back - with interest. They are planning to use it to research and implement alternative fuel technology and asking the very body responsible for energy policy to grant it.

A loan, even at favorable terms, is not a subsidy, bailout, or tax break. Lets not lump them all together as its not the same thing, no matter what you try to imply.

I see nothing wrong with them looking for a low interest loan to put it into new technology that will help keep them competitive as more of their consumer base looks toward those alternatives. If they aren't offering them they aren't competitive.

Subsidies and tax breaks are handed out to various sectors for far, far less than what they're asking for. Let's maintain some perspective here and not lump them all into the same basket.

-Spyder