Chrysler near accord for repayment to government

4/27/2011

DETROIT -- Details are still being worked out, but Chrysler Group LLC will announce Thursday a refinancing package that will repay its government loans, according to a person briefed on the matter.

Final details are likely to be revealed Monday, when Chrysler releases its first-quarter financial results, said the person, who asked not to be identified because the company is still negotiating the package with banks.

The refinancing would allow Chrysler to repay $5 billion that it still owes the U.S. government and $1.6 billion that is owed to Canada, money the governments lent the automaker to keep it alive and get it through a 2009 bankruptcy filing. Chrysler has tried for months to refinance the loans, which have high interest rates and cost the company $1.2 billion in interest payments last year.

The loans have been a problem for Chrysler and the Obama Administration, which approved the bulk of the U.S. bailout. Chrysler CEO Sergio Marchionne has complained that the loans carry interest rates that average 11 percent to 12 percent per year, far higher than the company would pay on the open market. Chrysler pays more than $3 million a day in interest.

The loans also have turned off some customers who are unhappy with the government bailouts.

Chrysler's announcement Thursday will coincide with an appearance in Detroit by Treasury Secretary Timothy Geithner, who is scheduled to visit a Chrysler factory and speak to the Detroit Economic Club about the economy.