MICHIGAN/TORONTO (Bloomberg) -- Chrysler Group intends this year to repay the U.S. and Canadian government loans that it received during its restructuring.
“I'd like to pay them off in 2011, if I could,” said Sergio Marchionne, CEO of both automakers. “I remain committed to that objective.” “Chrysler is paying over $1 billion in interest to the Canadian and U.S. taxpayers,” Marchionne said. “This was not a free ride. It was the most expensive financing that could possibly be obtained. I think it was done on the right terms.” he added.
Marchionne spoke to reporters Friday at Chrysler's Brampton, Ontario, assembly plant for an event celebrating the beginning of production of the redesigned Dodge Charger and Chrysler 300 sedans and the 2011 Dodge Challenger.
Chrysler is aiming for an initial public offering during the second half of this year after emerging from bankruptcy under Fiat's control in 2009.
Marchionne has said Chrysler is looking at refinancing U.S. and Canadian government loans and that Fiat may boost its ownership to more than 50 percent from 20 percent before the IPO.
The face value of Chrysler's debts to the U.S. and Canadian governments is about $7.46 billion, according to the automaker's third-quarter financial statement.
Dwight Duncan, Ontario's finance minister, said he would support Chrysler repaying its loans early. “I look forward to that,” he told reporters at the factory.
Fiat can increase its ownership stake by 15 percent by meeting certain goals, such as assembling cars in the U.S. that get 40 mpg. It has an option to acquire an additional 16 percent.
Repaying the loans early could allow Fiat to exercise that option in advance of 2013, analysts Brian Johnson and Kristina Church of Barclays Capital have written.
Chrysler has requested $3 billion in loans from the U.S. Department of Energy that Marchionne said he had hoped would be issued during the fourth quarter of last year.
“I'm hoping to get it done in the month of January,” Marchionne said.