NEW YORK — Chrysler Group LLC plans to launch a deal to repay more than $7 billion in government loans stemming from its 2009 bailout next Wednesday, four people familiar with the matter said.
Repaying the debt owed to the U.S. and Canadian governments would mark a critical step for Chrysler as the automaker tries to distance itself from the controversial rescue by the Obama administration and rebuild consumer confidence in the brand.
The No. 3 U.S. automaker, which emerged from bankruptcy in 2009 under the management control of Italian automaker Fiat SpA, plans to raise $6 billion in term loans and bonds to repay the government debt, these people said.
The company will also funnel $1.27 billion in cash from Fiat to pay down the remaining debt, the sources said. Fiat, which currently owns 30 percent of Chrysler, has said it plans to purchase an additional 16 percent stake in the U.S. automaker for $1.27 billion.
Chrysler also plans to raise a $1.5 billion revolving credit facility for general business purposes. It will remain undrawn and will not be used for paying down the government loans.
Morgan Stanley will lead the term loan deal, Bank of America the bond deal and Citigroup the credit line, people familiar with the matter said. Goldman Sachs is adviser on Chrysler’s overall refinancing efforts.