Chrysler officially confirmed it will pay back its loans from the U.S. and Canadian governments on Tuesday, May 24. As we reported earlier this week, the company has managed to raise $7.5 billion to repay the loans by offering secured securities and entering into additional loan agreements.
Chrysler plans to issue $1.5 billion in Notes that will mature in 2019, and $1.7 billion in notes set to mature 2021. In addition, the company has secured a $3 billion term loan and $1.3 billion in revolving credit. The new credit lines total $7.5 billion.
Repaying government loans is likely to impress American taxpayers and is a solid sign that Chrysler is moving toward improved profitability. It will also save the company a huge amount of money, as Chrysler paid $1.2 billion in interest on its government-issued loans last year. More important, the loan repayment means Fiat can up its ownership stake in Chrysler from 30 to 46 percent.