DETROIT (Reuters) -- Fiat Chrysler Automobiles said it has eliminated covenants linked to term loans of its U.S. unit, FCA US, thus gaining full access to the subsidiary's cash.
After completing a buyout of the U.S. unit in early 2014 and creating Fiat Chrysler Automobiles, the heavily indebted carmaker has been seeking to restructure Chrysler's finances to be able to fully access the division's cash, that until now was limited by a cap on dividends and debt covenants.
Fiat Chrysler can now use the cash to help fund a product overhaul of key brands Jeep, Alfa Romeo and Maserati by 2018, at which time the company also says it will have eliminated its net debt.
Fiat Chrysler Automobiles on Tuesday said its FCA US entered into amendments to its term loans maturing in 2017 and in 2018.
"The amendments represent the final step toward allowing the free flow of capital among members of the FCA Group, as previously announced, and enabling access to the second 2.5 billion euros ($2.8 billion) tranche of Fiat Chrysler Automobiles' 5 billion euros syndicated revolving credit facility," the company said in a statement.
It also said that FCA US made a $2 billion prepayment applied to the term loans, leaving an aggregate principal balance of the term loans of about $2.8 billion.