Chrysler pays off $7.6B in bailout debt
Chrysler and Fiat chief executive Sergio Marchionne, right, wears a pin Wednesday, May 25, 2011, saying "PAID," a day after his company repaid most of the loans from the U.S. and Canadian governments made to keep the company afloat three years ago. Credit: AP
With a few computer keystrokes in an office at its headquarters, Chrysler Group sent $7.6 billion to the U.S. and Canadian governments Tuesday, paying off most of the bailout money that saved the company from financial disaster just two years ago.
The repayment at 10:13 a.m. was expected for weeks and is another sign of the automaker's comeback. Chrysler went from a company that almost ran out of cash and endured bankruptcy in 2009 to one that is revamping its lineup and last quarter posted its first net profit in five years.
"A lot of us remember that until just a short time ago, in the eyes of most, Chrysler had been condemned to death," chief executive Sergio Marchionne told workers gathered at a Chrysler car factory outside Detroit.
Chrysler also removed the stigma of being a government ward. But the repayment also means it must stand on its own and continue to overhaul a lineup that still depends on old Chrysler designs and larger vehicles that have fallen out of favor because of high gasoline prices.
The firm took $10.5 billion from the U.S. government to survive two years ago and earlier had repaid some of the money. On Tuesday it retired a $5.9-billion balance on the U.S. loans and $1.7 billion to the governments of Canada and Ontario.
To pay off the governments, Chrysler raised $3.2 billion through a bond sale and took out $3 billion in lower-interest bank loans. It also will use a $1.3-billion investment from Italian automaker Fiat, which kicked in the money Tuesday to raise its Chrysler stake to 46 percent, making it the largest shareholder.
The U.S. Treasury still owns 6.6 percent of Chrysler, part of the original stake it got in exchange for the bailout.
